ROUNDTABLE
ON SUSTAINABLE
PALM OIL
IMPACT REPORT 2014

Photo credit: New Britain Palm Oil Ltd
Edited by Helikonia
Design by Meta Fusion Pte Ltd

CONTENTS
Welcome by RSPO Secretary General
Impact Report Highlights
Facts about palm oil
The Roundtable on Sustainable Palm Oil
Certified Sustainable Palm Oil
Measuring our impact
Partnering with leading experts
PeopleBetter livelihoods
Protecting the rights of local communities
PlanetProtecting biodiversity
Reducing greenhouse gas (GHG) emissions
Soil and water
ProfitImproving yields for smallholders
Driving market transformation
References
Base data and notes
Glossary

02
04
06
10
17
24
26
28
28
34
40
40
48
54
58
58
68
74
76
79

01
RSPO IMPACT REPORTWELCOME BYRSPO SECRETARY GENERALIMPACT REPORTPRESENTED BY DARREL WEBBERRSPO SECRETARY GENERAL

When the RSPO was first established a decade ago – all it
had to its name was a small group of enthusiastic pioneers
envisioning to eradicate some of the world’s most intense
dilemmas in the palm oil sector. These issues range fromdeforestation, extinction of wildlife, unethical practices,
opaque business operations and land conflicts, to name a few.
Over time, since the implementation of its international
standard (Principles & Criteria) in 2008, the institution has
generated its fair share of commendation while doubling
in denigrations received - which is expected and to somedegree necessary for a growing organisation which prides
itself on continuous improvement.
To date, we have successfully generated data based on
Certified Sustainable Palm Oil year on year production
by volume; hectares; demand; geography; supply chain
mechanisms; etc. Much of this data demonstrates
exceptional traction for an agricultural commodity in ahighly a complex supply chain with such versatile productusage. RSPO Certified Sustainable Palm Oil has evenentered into the rankings as 5% of the major vegetableoils used in the world in addition to the 30% contributed by(uncertified) palm oil.

02
RSPO IMPACT REPORT

However, it is no longer adequate that the production
volume of Certified Sustainable Palm Oil be boasted against
global production volume at over 14.8%, which while
phenomenal, neglects to reaffirm the ground impact on
People, Planet and Profit. None of these three components
are autonomous – they are each meticulously interwoven
and firmly dependent on one another, hence strengthening
the need to evaluate the impact of RSPO and our initiatives
focused on them.

RSPO is a voluntary standard andin itself conjures the impressionthat companies willingly
commit to making the shift toresponsible practices, steeredby their own conscience andintegrated into their business
operations and mission.

Herein –the significance in presenting, for the first time,the in-depth 2014 Impacts Report outlining the social;environmental and economic progress of the RSPO to dateas a result of the commitment from all the players in the
sector, not precluding the collaboration received fromgovernments, civil society, academicians, media etc.

We are pleased that despite the challenges we continue
to be confronted with in the transformation to making
sustainable palm oil the norm – the commitment by boththe private sector and civil society including governments
has not abated - in fact as we witness in this report, it has
fast-tracked. Still – more needs to be done, and urgently.

We will position this report as a bi-annual delivery, which
will be made public as per recommendations from ISEAL
Alliance, a global membership association for sustainability
standards. The report will be steered by the Impacts Unit
within the RSPO Secretariat, which was recently established
to review and monitor certification impacts, compliance with
the ISEAL codes and collecting learnings and best practices
for further system improvement. The progress in this reporthas been calibrated against specific indicators that areconsidered to be comparable across different conditions,oriented to change over time, sufficiently specific,
measurable with reasonable cost and effort, attainable andactionable.

The state of affairs of the future is not dependent on therousing, conflicting worldwide debates occurring currently
on the issue of climate change. It is in fact indispensably
contingent on the action rather than the inaction (including
rhetoric) each one of us will take. At the RSPO - we are notdeferring our labour till global coherence is achieved on
the climate debate – we are moving forward. Co-operation
continues to be critical at all national, sub-national andinternational tiers. Sustainability and growth can work handin hand and we must continue to attest to that.

Establishing and sustaining trust in the palm oil industry
that its commitment to sustainable practices has reaped
effective and meaningful results toward a restored worldis imperative. This report hallmarks a shift to a criticalphase of acquiring and assessing impact as a result of all
the discourse, collaboration, strategy, vision and execution
demonstrated within the sector in the last ten years since
the formation of the RSPO.

Our next motivation is to fulfil the severe necessity to movefrom merely the rhetoric to evidence based – from being
output focused to becoming outcome invested. We havealready initiated programs in this direction with somecollaborative international arrangements and partnerships.

03
RSPO IMPACT REPORTRSPO is a voluntary standard and in itself conjures theimpression that companies willingly commit to making
the shift to responsible practices, steered by their own
conscience and integrated into their business operations
and mission. Barring any cynicism, this should be emulated
and perceived as exemplary for the commodities sector.

The industry has to brace itself to adapt to the changing
landscape with emerging new expectations. There ismuch capital that can be acquired and leveraged froma multi stakeholder organisation such as the RSPO in
working towards a trajectory that is optimistic and lit withrevolutionary possibilities for the palm oil industry.

IMPACT REPORTHIGHLIGHTSThe Roundtable on Sustainable Palm Oil (RSPO) is a multi-stakeholder non-profit organisation that works to promote thegrowth and use of sustainable oil palm products through co-operation within the supply chain and open dialogue between
its stakeholders. Roundtable members represent every link in the palm oil supply chain: oil palm growers, palm oilprocessors and traders, consumer goods manufacturers, retailers, banks and investors, environmental conservation NGOs
and social development NGOs.
Our vision is to transform the market by making sustainable palm oil the norm.

As of June 2014, we had 1,631 registered members located in 72 countries. Read
more about our membership on page 12.

As of June 2014, more than 11.1 million tonnes of sustainable palm oil,accounting for 18% of global palm oil, was produced in nine countries. Findout why our certification system is the leading global commodity certification
standard on page 17.

We have certified over 3 million hectares of oil palm plantations in nine countries.
Learn more about certified areas on page 19.

04
RSPO IMPACT REPORTWe have certified 258 palm oil mills with a combined production capacity of
11.1 million tonnes of certified sustainable palm oil.

Our eTrace system monitors the physical trade of millions of tonnes of CSPO
globally. Learn more about the different types of sustainable palm oil trade on
page 21.

Most large RSPO grower members have now voluntarily phased out use of thecontroversial Paraquat pesticide. Learn more about how we are working tominimise chemical use on page 31.

05
RSPO IMPACT REPORT

Photo credit: Felda Global Ventures Holdings Berhad

FACTS ABOUTPALM OIL

The oil palm (Elaeis guineensis)
is native to Africa and now grows
in equatorial regions around theworld. Used as food and medicine
for thousands of years, the earliest
archaeological evidence of palm oil use
comes from residue in an earthenware
jar discovered in an Egyptian tomb
dated to 3,000 BCE. Today, palm oil
is found in food products including
margarine, cereals, crisps, sweets
and baked goods, as well as in soaps,
washing powders and cosmetics.
Palm oil is often labelled as avegetable oil, but it is actually
extracted from the fruit of the oil palm.
This fruit grows in a large cluster
known as a fresh fruit bunch (FFB).
Harvesting of fruit bunches can begin
after the palm reaches three yearsof maturity: the flesh is processed to
produce crude palm oil, while the palm
kernel is refined to palm kernel oil.

06
RSPO IMPACT REPORTOil palm is an extremely productive
crop. Just one hectare of oil palm
produces on average almost 10
times more oil than other oil crops.
Although sophisticated tissue culture
and breeding techniques continue toincrease the yields of oil palm, there iscurrently no genetically modified palm
oil in the marketplace.

Oil palm contributes significantly to
the global supply of edible oils. In
2013, palm oil and palm kernel oil
accounted for 40% of the 169 million
tonnes of global vegetable and fruitoils produced. Malaysia and Indonesia
account for 86% of global palm oil
production. The largest importersof palm oil are India, China and theEuropean Union, together accountingfor 50% of global imports. Indonesia isthe largest consumer of palm oil.
Oil palm is cultivated in 17 countries,
with ideal growing conditions
occurring up to 10 degrees on eitherside of the equator. However, thisequatorial belt is also host to richbiodiversity, high conservation value(HCV) ecosystems and rare andendangered species – not to mention
a growing human population. Oil palm
cultivation provides a livelihood to over
4.5 million people and over 40% of all
oil palm is cultivated by smallholders.
This has led to a challenge to find abalance between the need to protect
the environment, the need to provide
a livelihood for smallholders, andthe need to produce enough edible
oil to meet the demands of a growing
global population. The Roundtable on
Sustainable Palm Oil (RSPO) has been
established to address this challenge.

GENERAL FACTS ABOUTOIL PALM TREE AND FRUIT

3–30 kg
per fresh
fruit bunch

25–30 year
planting cycle
1.5–3 years
to fruiting

20 metres heightKERNELMESCOCARPPALM KERNEL OIL

In 2013, palm oil andpalm kernel accounted
for 40 percent of the
169 million tonnesof global vegetableoil produced.

PALM OIL

MAJOR VEGETABLE OILS
169 MILLION MT IN 20134%

4%

3% 2% 1%30%

5%Palm (non-RSPO certified)
SoyabeanRapeseed
Sunflower Seed
Certified Sustainable Palm Oil
Palm Kernel
PeanutCottonseed
Coconut
Olive

10%

07

27%

RSPO IMPACT REPORT

14%

PRODUCERS AND IMPORTERS
OF OIL PALM

Producer Country*
53%
Indonesia
33%
Malaysia
4%
Thailand2%
Colombia
1%
Nigera7%
Others08
RSPO IMPACT REPORT

Imports of Palm Oil 2013*
20%
India
15%
China
15%
EU
6%
Pakistan
3%
US
3%
Egypt
3%
Bangladesh
2%Singapore
2%
Iran
2%
Russia29%
Others*Oilseeds: World market and trade. May 2014

The largest importer of oil palm is India, China and the EU,of the global imports.
accounting for

50%

Malaysia and Indonesia account for 86%
of the global palm oil production.

OIL YIELD

3.8

PER TONNE PER HECTARE

09
0.42

Soybean

Sunflower

0.59
Rapeseed

Palm OilRSPO IMPACT REPORT

0.36

THE ROUNDTABLE ON

SUSTAINABLE PALM OIL
The Roundtable on Sustainable Palm Oil (RSPO) is a multistakeholder non-profit organisation that works to promote
the cultivation and use of sustainable palm oil. Our vision
is to transform the market by making sustainable palm oil
the norm.

actively monitor and evaluate the economic, environmental
and social impacts of the uptake of sustainable palm oilin the market. We also engage and seek the commitmentof all stakeholders throughout the supply chain, including
governments and consumers.

All RSPO activities are focused on advancing the production,
procurement, finance and use of sustainable palm oil
products. In pursuit of our aims, we develop, implement,
verify and periodically review credible global standards forthe entire supply chain of sustainable palm oil, and provide
a certification framework to help each player operationalise
these standards / put these standards into practice. We

RSPO began as an informal cooperation between several
multinational companies and the WWF. In January 2003, anorganising committee was created to set up the inauguralRoundtable meeting in Kuala Lumpur and prepare forthe formal establishment of RSPO. RSPO was legally
established on 8 April 2004 under Article 60 of the Swiss
Civil Code.

RSPO ANNUAL ROUNDTABLE
The Annual Roundtable is RSPO’s flagship event. Heldover three days, the meeting brings together over 1,000
delegates and observers, providing a unique opportunity for
all stakeholders along the sustainable palm oil supply chain
to meet and debate the evolving dimensions of the market.
In 2013, RSPO launched the first annual European summit
to reach out to European stakeholders who are not able toattend the Annual Roundtable held in Southeast Asia.

10
RSPO IMPACT REPORTRSPO GOVERNANCE& MANAGEMENT

ORDINARY MEMBERS

AFFILIATE MEMBERS

SUPPLY CHAIN ASSOCIATES

GENERAL ASSEMBLY (GA)BOARD OF GOVERNORSSECRETARY GENERALSTANDING COMMITTEESTANDING COMMITTEESTANDING COMMITTEESTANDING COMMITTEE

Trade and Traceability

Communications & Claims

Standards & Certifications

Finance

WORKING GROUPSWORKING GROUPSWORKING GROUPSWORKING GROUPSRSPO is governed by its Statutes and By-laws, as well as by antitrust guidelines that prevent breaches of antitrust law andthe competition laws and regulations of countries in which our members operate.
RSPO has adopted a Code of Conduct to which all members are required to adhere. This defines how we expect members
to behave towards each other: for instance, that they must seek to resolve grievances directly with each other and that theymust explicitly support RSPO and its objectives.

11
RSPO IMPACT REPORT

THE ROUNDTABLE ON

SUSTAINABLE PALM OIL
MEMBERSHIPAs of June 2014, RSPO has 1,631 members located in 72 countries. Over 60% are ordinary members; the remaining 40% ismade up of affiliate and supply chain associate members. Among ordinary members, consumer goods manufacturers are thesingle largest block with 410 members. Together with processors and growers they account for over 90% of ordinary members.

MEMBERSHIP TYPEAS AT 30 JUNE 2014

991

12

100

540

ORDINARY MEMBERS

AFFILIATE MEMBERS

SUPPLY CHAIN ASSOCIATES

comprise the seven core entities within
the palm oil supply chain. These are
the oil palm growers, processors &traders, manufacturers of consumer
goods, retailers, banks & investors,
environmental NGOs and social/
developmental NGOs. Only ordinary
members have to commit to a timebound plan to produce or use 100
percent CSPO.

are organisations or individuals who
are not actively involved in any of theseven sectors, but have expressedinterest in the objectives and activitiesof the RSPO. Membership extends toacademia, research and development
organisations, donors, and sponsors.
Affiliate members may attend theannual General Assembly as observers.

are companies procure less than
500 tonnes of certified sustainablepalm oil in the supply chain. Supply
chain associates members may attend
the annual General Assembly as
observers.

Companies with business acrossthe palm oil supply chain qualify formembership in only one sector. Only
ordinary members are allowed tosubmit resolutions and vote at theannual Roundtable meeting.

RSPO IMPACT REPORTORDINARY MEMBERSHIPAS AT 30 JUNE 201413

Environmental andConservation NGOs

RetailersSocial and developmental NGOs

27

12

Banks and Investors

53

Oil Palm Growers

Palm Oil Processors
and Traders

127
410

Consumer Goods
Manufacturers349

TOP 10 NATIONALITIES OF
MEMBERSHIP

208

200

119

117
109

106
89
62

53

52

13
UnitedKingdom

Netherlands

Malaysia

Indonesia

FranceUnitedStatesBelgium

Italy

Australia

RSPO IMPACT REPORT

GermanyTHE ROUNDTABLE ON

SUSTAINABLE PALM OIL
BOARD OF GOVERNORSThe RSPO is guided by a 16-member Board of Governors representing the seven membership categories. Board
members are elected for a two-year term and any member of good standing may nominate himself or herself torepresent their sector. Ordinary members can only vote for the representative in their sector. Two special advisors withparticular insights into the two major palm oil producing countries – Malaysia and Indonesia – have been appointed toserve the Board of Governors.

SectorNumber of Seats

Oil Palm Growers One representative from Malaysia, Indonesia,
Smallholders and the “Rest of the World”.
Palm Oil Processors and/or Traders
Consumer Goods Manufacturers
Retailers
Banks / Investors
Environmental/Nature conservation NGOs
Social/Development NGOs

SECRETARIAT
Day-to-day management of RSPO is undertaken by the secretariat, which is based in Kuala Lumpur, Malaysia, andsupported by liaison offices in Jakarta, Indonesia (RILO), the Netherlands, and the United Kingdom. The secretariat
conducts outreach to members and stakeholders, coordinates meetings of the Board of Governors, convenes roundtablesessions and organises the annual General Assembly.
The Secretary General leads the secretariat and is responsible for implementing RSPO’s strategic business plan. The
Secretary General also manages the team that administers membership services, and offers administrative and project
support to working groups and task forces.

14
RSPO IMPACT REPORTGENERAL ASSEMBLY
The General Assembly is the annual general meeting of members. It is convened to ensure transparency in RSPO’s
administrative and financial operations, and sets out the working agenda for the coming year. The General Assembly is also
the forum where members propose and deliberate resolutions on the governance and position of RSPO. Resolutions thatare passed are then enacted as part of the RSPO programme in the coming year.

STANDING COMMITTEERSPO operations are overseen by four Standing Committees. Each is chaired by a non-board member and is made up of
RSPO members. The four Standing Committees deal respectively with:Standards & Certification
Researching and developing definitions and criteria for the sustainableproduction and use of palm oil; developing solutions and best practice;facilitating implementation and resolving practical problems related to theadoption and verification of best practices for plantation establishment andmanagement, procurement, trade and logistics.

Trade & Traceability
Developing solutions to practical problems related to procurement, trade andlogistics in sustainable palm oil.

Communications & Claims
Developing policies and promoting the use of RSPO certified sustainablepalm oil.

Finance
Overseeing the financial responsibilities of RSPO.

15RSPO IMPACT REPORT

THE ROUNDTABLE ON

SUSTAINABLE PALM OIL
WORKING GROUPSAND TASK FORCESRSPO WORKING GROUPSAND TASK FORCES

One of the functions of Standing
Committees is to convene working
groups and task forces to undertake
special projects. Working groups
conduct long-term projects within
particular areas of enquiry; task forces
are created to deliver specific output
against set timelines. Special groups
have also been created to support
RSPO operations. For instance, a
Dispute Settlement Facilities Advisory
Group and Complaints Panel guide
resolution in cases of complaint.

Working Groups

Task Forces

Smallholders Working Group

RSPO-RED Taskforce

Biodiversity and High Conservation
Values Working Group

Compensation Task Force
Indonesia HCV Task ForceEmissions Reduction
Working Group

Supply Chain Document
Review Task Force

Human Rights Working Group

National Interpretation
Task Forces

Each working group is made up ofrepresentatives from all categories
of ordinary members. Membershipof working groups and task forces isvoluntary and open to those with aninterest in the subject matter. The chairof each working group is elected byits members. There are currently six
working groups and five task forces.

Legal FFB and Traceability
Working GroupRSPO – A UNIQUE WAY OF WORKING

16

Consensus and sustained objection

Annual Communication of Progress (ACOP)

Decisions taken by the Board of Governors, or in working
groups and task forces, are free from sustained objections.
Members can take a position of sustained objection, whichallows for further deliberation and discussions before aconsensus-based resolution is reached.

Ordinary and associate members are required to submit
a yearly ACOP that details their progress toward theirtime bound plan. This enables us to measure both thecommitment of our members and the pace with which weare achieving our vision of transforming markets to makesustainable palm oil the norm.

Anti-flagship clause

RSPO IMPACT REPORTThe anti-flagship clause is unique to the RSPO. The clause
prevents an organisation from only certifying its best
performing plantation. Members must certify all units inaccordance with a time bound plan.

Ongoing upgrade of standards
RSPO Principles and Criteria (RSPO P&C) and the RSPO
Supply Chain Certification undergo public consultation every
five years to ensure the robustness of their standards. In
April 2013, four new criteria and 40 new indicators wereadded to RSPO P&C.

CERTIFIED SUSTAINABLE

PALM OIL

As of June 2014, more than 11.1 million tonnes of sustainable palm oil were produced in 12 countries. This represents 18%of all global palm oil produced that year. RSPO also provides a certification system for sustainable palm kernel oil (CSPKO).
Our certification standard is anchored in our Principles and Criteria (P&C), first developed in 2005 and revised in 2013.
These define what sustainable palm oil production looks like in practice. In addition, our certification system encompasses
a rigorous supply chain certification procedure that ensures that certified sustainable palm oil reaches the end user. All
certification processes are audited and, as of 2014, must be conducted by accredited third-party certification bodies.

RSPO PRINCIPLES AND CRITERIA (P&C)
RSPO P&C is made up of eight core principles that plantations and mills must comply with in order to attain certification.
Generic criteria, indicators and guidelines are provided to assist members in addressing the core principles. Keyinternational laws and conventions are also incorporated. Grower members commit to implement and audit against the
P&C across their entire operations, including subsidiaries and joint ventures with major shareholdings.
Growers undergo an annual surveillance audit and re-certification audit every five years by a third party independent
assessor that is in turn independently accredited. Growers must address non-compliance of major indicators within threemonths or risk sanctions by the RSPO.

8 Principles of Sustainable Production of Palm Oil• Commitment to transparency• Compliance with applicable laws and regulations  
• Commitment to long-term economic and financial viability• Use of appropriate best practices by growers and millers• Environmental responsibility and conservation of natural resources and biodiversity• Responsible consideration of employees and of individuals and communities affectedby growers and mills• Responsible development of new plantings• Commitment to continuous improvement in key areas of activity

17
RSPO IMPACT REPORTCERTIFIED SUSTAINABLE

PALM OIL
National Interpretations

Certified Areas and Production of FFB

Every country has its own legislation, customs and naturallandscapes. These factors may affect the way that RSPO P&C
are interpreted. In recognition of this, RSPO has developed
P&C National Interpretations (NI) to provide relevant guidancefor plantations and mills in specific countries.

Since the approval of RSPO P&C in 2008, 57 growers (44%of grower members) have certified 3 million hectares ofplantations in 12 countries. Indonesia and Malaysia accountfor 89% of the total certified area. According to audit
reports, approximately 201,908 hectares (6.7% of the total)
has been set aside for high conservation value (HCV) areas.

NIs have been developed for Ghana, Indonesia, Malaysia,
Papua New Guinea, Solomon Islands, and Thailand, and areavailable in Bahasa Indonesia, English, French, Portuguese,
Spanish, and Tok Pisin. These NIs are currently being
revised in accordance with the P&C 2014.
Countries without an NI follow the generic guidancein the annex to the P&C. They may also seek a local
interpretation for their production of sustainable palm oil.
Companies operating in countries which have not ratified
key international conventions or laws referred to in the P&C
must comply with the standards and conventions statedin the P&C. Local laws and policies that provide a higher
benchmark within the industry will be recognised.

As of June 2014, certified growers produced 51 million
tonnes of fresh fruit bunch (FFB). Indonesia is the largest
supplier of FFB, with 48% of the total production.
Based on filed ACOPs, 23 growing members have achieved
certification of their entire plantation operations. A further
20 growers have committed to be fully certified by 2015.

18
RSPO IMPACT REPORT

Photo credit: Felda Global Ventures Holdings BerhadTOTAL CERTIFIED AND
PRODUCTION AREA BY COUNTRYFFB PRODUCED (MT)AS OF JUNE 2014

• Certified Area • Production Area
1,469,839
1,242,375

Indonesia

Papua New
GuineaBrazilCôte d’Ivoire

Colombia
Thailand
Guatemala24,416,700

1,181,589
1,051,481

Malaysia

21,761,060

149,706
125,394
107,560
33,06020,234
18,43318,00915,8202,876,851

16,822
15,301

1,873,591

10,143
7,989
Indonesia

Malaysia

Papua New
GuineaRest of theWorld

Certified mills
As of June 2014, RSPO has certified 258 palm oil mills with a combined production capacity of 11.1 million tonnes of CSPO
and 2.5 million tonnes of CSPK. Malaysia and Indonesia account for more than 90% of CSPO produced globally.

ANNUAL PRODUCTION CAPACITY
OF CSPO AND CSPK (MT)

2008

2010

2011

9,792,185

2012

2013

2,556,432

338,740

1,473,912

2009

2,244,3120As at
30 June 201419
RSPO IMPACT REPORT

2,000,000

619,0124,000,000

154,335

6,000,000

803,999

3,522,207

8,000,000

1,296,488

5,573,202

10,000,000

1,896,706

8,184,200

12,000,000

11,125,902• CSPO (MT) • CSPK (MT)CERTIFIED SUSTAINABLE

PALM OILTOTAL CSPO AND CSPK BY COUNTRY

4,538,052

6,000,000

5,538,192• CSPO • CSPK

5,000,000

RSPO Supply Chain Certification
Our supply chain certification standard ensures theintegrity of the trade in sustainable palm oil at every stageof the supply chain. It applies to every facility that makes
product-related claims regarding the use of certified palm
oil derivatives. It regulates the handling, storage, transport,
trade, refining process, packaging and even labelling ofsustainable palm oil products.

Colombia

ThailandCambodia

6,800
3,200

Brazil

6,500
1,200

Guatemala

20,489
3,995

Papua
New
Guinea43,541
10,911

Malaysia

68,205
15,412Indonesia

146,780
26,8990

246,969
52,8701,000,000

622,354
140,3412,000,000

1,110,663

3,000,000

1,219,166

4,000,000

Côte
d’Ivoire

EcuadorHow sustainable certification works
in practiceIn order to drive uptake of sustainable palm oil, RSPO
offers two trading systems: one for the physical trade ofsustainable palm oil and one that enables virtual tradingof sustainable palm oil certificates, also known as theGreenPalm programme.

20
RSPO IMPACT REPORT

Photo credit: New Britain Palm Oil Ltd

Physical Trade
In this system, CSPO may be physically traded according to one of three supply chain models:

IDENTITY PRESERVED
Palm oil is separated from oil thatis not RSPO certified. This oil can bephysically traced back to its mill oforigin.

SEGREGATEDCSPO from multiple estates is mixed
in batches. Oil traded in this modelcannot be traced back to the specificmill or plantation, but is guaranteed
to be physically traceable to a certified
source.

MASS BALANCE
RSPO-certified sustainable palm oil
can be mixed with conventional palm
oil at any stage of the supply chain
process provided that overall company
quantities are controlled.

21

The palm oil supply chain is complex so it is vital we are able to keep track of how much CSPO is in the value chain
and where it is. Launched on 23 July 2012, RSPO eTrace has been developed to administer and monitor the physicaltrade of CSPO globally. RSPO eTrace provides a clear overview of every stock, every physical transaction, and every
CSPO conversion and downgrade performed.

RSPO IMPACT REPORTRSPO eTraceCERTIFIED SUSTAINABLE

PALM OIL
Virtual trade

In this system, CSPO may be virtually traded according to the Book & Claim supply chain model using the RSPO-endorsed
GreenPalm programme:

GreenPalm
CSPO may be virtually traded under the GreenPalm programme. Certified growers are awarded one GreenPalm
certificate for each tonne of CSPO produced. Certificates can be sold on the GreenPalm web-based trading platform, andmanufacturers or retailers that purchase them can claim to support the sustainable production of palm oil. And because itis flexible and easy to implement, GreenPalm empowers independent smallholders to participate in the sustainable palm
oil supply chain. Under the GreenPalm system, the group manager for the independent smallholder can participate in thesystem by dealing direct with potential buyers.

22
RSPO IMPACT REPORTUPTAKE OF CSPO

Supply and Uptake

Metric Tonnes
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
2008

2009

2010

2011

2012

2013

AS AT 30JUNE 2014

CSPO Sales through B&C

4,425

245,813842,619

1,659,516

2,495,277

2,962,256

1,361,396

CSPO Sales through SG,MB–

98,044

438,515

831,010984,138

1,551,017

1,117,042

163,364

1,259,467

2,335,052

3,967,502

5,740,098

7,184,827

2,797,626

CSPO balance

Every year between 2009 and 2013, out of all palm oil
produced, there was on average a 14.5% physical uptakeof CSPO and a 30% uptake through the GreenPalm
programme.
In 2013, the combined uptake of CSPO through physical andcertificate trading rose to 51%, 5% higher than the average
uptake over the last five years. In addition, RSPO has seena physical uptake of 20% as members move towards theirtarget of 100% sustainable palm oil use in this financial
year. As of June 2014, the uptake is 40.7%
To ensure that demand matches supply, 134 consumer
goods manufacturers have committed to 100% use of CSPO
by 2015. Such a commitment will tremendously enhance
uptake of sustainable palm oil.

RSPO-RED scheme
RSPO-RED is a single crop certification scheme and a
voluntary add-on to RSPO certification. It enables producers
to supplement their sustainable production of palm oilwith a reduction in greenhouse gases (GHG). The scheme
combines RSPO standard requirements and EU Renewable
Energy Directive requirements.
Approved by the European Commission in 2012, the RSPORED scheme requires palm oil producers to reduce their
GHG emissions by 35%, with a 50% GHG emission reduction
from 1 January 2017.
Growers must first meet the RSPO P&C before applying tomeet this voluntary certification. The certification is only
possible for land under palm oil cultivation before January
2008 and only mass balance or segregated chains ofcustody are permitted. The first shipment of RSPO RED oil
was delivered to Europe in July 2014.

23
RSPO IMPACT REPORT

Photo credit: New Britain Palm Oil Ltd

MEASURING

OUR IMPACT
Making sustainable palm oil the norm is our long-term vision and there is a long journey ahead. To ensure we stay on
track we constantly monitor our progress and the impact our work has: for our members, for the palm oil market as awhole and for the communities in which our members operate. In this we are supported by a number of tools and strategic
partnerships that ensure RSPO delivers on the evolving needs of its members and stakeholders.

RSPO IMPACT MONITORING FRAMEWORKThe RSPO impact monitoring framework outlines the intended outcomes and long-term impacts of our activities. It enables
us to measure our performance as we work towards our vision. The key themes of the framework include ensuring thatRSPO delivers environmental, social and economic benefits to all stakeholders.
In measuring social, environment and economic impacts, RSPO has identified indicators that are aligned to the RSPO
standards. These indicators are based on criteria developed and recommended by the Committee on Sustainability
Assessment (COSA), a non-profit consortium with a mission to advance useful and transparent measurement tools tobetter understand, manage and accelerate sustain ability.
The indicators are generally comparable across different conditions, oriented to change over time, sufficiently specific,
measurable with reasonable cost and effort, attainable and actionable.

SUSTAINABLE
PALM OIL MARKET
BY 2015

SOIL AND WATERCONSERVATION24

PLANETPEOPLEPROFIT

Environmental
BenefitSocialBenefits

Economic
Benefits

GHG EMISSION
REDUCTION

BIODIVERSITY
AND FORESTPROTECTIONRIGHTS AND
PARTICIPATORYPROCESSYIELDIMPROVEMENTS& BMPS

BETTERLIVELIHOODS

ENTERPRISERESILIENCERSPO IMPACT REPORTPARTNERING FOR STRONGER SYSTEMSIn December 2012, RSPO became an associate member of the ISEAL Alliance, a global membership association forsustainability standards. Established as a non-governmental organisation, ISEAL’s mission is to strengthen sustainability
standards systems for the benefit of people and the environment. ISEAL Alliance’s goal is to improve the effectiveness,
impact and credibility of sustainability standards and increase their uptake.

Impacts unit
In July 2013, following a restructuring at the RSPO Secretariat, the Impacts Unit was established and is now responsible formonitoring certification impacts, compliance with the ISEAL codes and collecting learnings and best practices for further
system improvement.
The RSPO has adopted ISEAL’s Code of Good Practice for Impacts Assessment. The code provides for three data collection
instruments to monitor impact of our activities.

Level 3In-depth studies

Level 2
Mentoring data from asample of certified units

Level 1
Data from all certified units,
New Planting Procedures andAnnual Communication of Progress

Data collection instruments based on
ISEAL Code of Good Practice for Impacts Assessment

25
RSPO IMPACT REPORTAs of early 2014, RSPO
certified palm oil plantations
cover an area approximately
27 times the size of Singapore–and this continues to grow fast.

PARTNERING WITH

LEADING EXPERTS
As an NGO with a broad mandate for change, we recognise the need for specialist
knowledge and expertise. By establishing partnerships with experts worldwide
we continually expand our understanding of the palm oil industry and discover
new ways to make it more sustainable.
We also collaborate with world-class organisations and research institutes
to explore specific issues and challenges affecting the production and use ofsustainable palm oil.

ONGOING RESEARCH COLLABORATIONS AND
OTHER INDEPENDENT RESEARCH
Organisation/ Research InstituteResearch Topic

Royal Society SE Asia Rainforest Research Programme(SEARRP)

Socially and Environmentally Sustainable Oil palm
Research (SEnSOR)

Wageningen University (via ISEAL)

Next Generation Governance Arrangements for
Sustainable Global Values Chain (GVCs)

Universiti Putra Malaysia

The role of RSPO process in improving and sustaining the
livelihood of small farmers in Malaysia

Universiti of Jambi

RSPO certification impacts of independent smallholders
in Jambi, Indonesia

Other independent research:
CIFOR

1. Oil palm sentinel landscape
2.	Sustainable development of palm oil production:
designing strategies from improved knowledge on oilpalm cropping system – SPOP
3.	Large scale investment in Food, Fibre and Energy:
Sustainable options that work for forests and the poor
(LIFFE)
4. Corporate governance in the palm oil sector

26
RSPO IMPACT REPORT

5.	Large scale land acquisition for plantation estatesin Indonesia
University of Cambridge

Cambridge Conservation Initiative’s project:“Enhancing the spatial targeting of tropical crop
eco-certification”

27
RSPO IMPACT REPORT

Photo credit: Kulim (M) Berhad/Björnberg

PEOPLEOver 900 million people live in the 15 countries where certified palm oil plantations operate and where notifications of newplantings have been made. On average, 65% of this population live in rural areas and 35% live on less than USD2 dollars per day.
According to the United Nations Human Development Index – a statistic that combines life expectancy, education and income
for every country – the average rank of these 15 countries is 163. The cultivation of sustainable palm oil therefore represents
a significant opportunity to raise the standard of living and provide local communities with social and economic benefits.

BETTER LIVELIHOODS
The cultivation of sustainable palm oil cannot be achieved without improving the livelihood of workers and supporting
communities that are intertwined with the operations of oil palm estates. This is why RSPO requires members to adhere to
specific principles regarding the development of community infrastructure and the improvement of health and education systems.

Our P&C on workers and community
Rights of workers
There should be no discrimination based on race, caste, national origin, religion,
disability, gender, sexual orientation, union membership, political affiliation, orage. Workers are protected from harassment and abuse. Workers have the rightto form and join trade unions of their choice and to bargain collectively. A parallelmeans of independent and free association and bargaining is developed when theright to freedom of association and collective bargaining is restricted under law.

Free from bonded labour
There are to be no forms of forced or trafficked labour. Passports or travel
documents of workers may be kept by the company for safekeeping on a
voluntary basis. Companies must demonstrate that workers are able to retrieve
identity documents upon request.

Decent living conditions
Pay and conditions for employees and for contract workers must meet the legal orindustry minimum standards. Wages must be sufficient to provide a decent living.

Health and safety
Regular health and safety meetings, briefings, risk identification and mitigation
are documented. Appropriate training must be provided to staff and workers
related to their job task, such as responsible storage, use and disposal ofpesticides, operating machinery and tools.

28

Social impact assessment

RSPO IMPACT REPORT

Each certified mill must conduct a social impact assessment that identifies andminimises negative impacts from their operations. We believe communities
should be allowed to continue with their traditions, pursuing life in a manner towhich they are accustomed.

RAISING THE BAR IN
LABOUR STANDARDS
Daryll Delgado
Programme Manager, Research and Stakeholder
Engagement Unit, Verité Southeast Asia.
From our observation, we can surmise that RSPO
companies are in a better position when it comes tocompliance with labour standards because of the P&C
and certification process. There can be a potentially vastdifference between RSPO certified plantations and nonRSPO certified plantations in terms of the recruitment,
retention and treatment of workers, as long as they
comply strictly with the P&C requirements.

There appears to be three recruitment systems in thepalm oil industry. There are companies that directly
select, interview, train and document workers.
Companies also sub-contract workers through acontractor to provide a ‘service’. We find this potentiallyproblematic. The third type is very informal and risky:anyone can just walk in to a plantation and bring inworkers or offer their own services, and this is what
we are most worried about. We have documented
such cases in RSPO growers. Companies are not able
to or do not have the mechanisms to formally verify
how workers ended up in the plantation. Were they
trafficked in? Did they pay an excessive fee to a broker?
What terms and conditions were promised and arethose being met?

Without leverage and bargaining power, these workers
are susceptible to low pay, unsafe working conditions,little training, and poorly monitored work hours in order
to secure employment. It also puts the company at risk interms of compliance with the RSPO P&C and local laws.
Labour and social issues are very dynamic andmeasures and indicators are not easily quantifiable.
Trafficked and forced labour are hidden from audits:they are an invisible workforce. Auditors therefore play
an important role. Those who do not carefully verify
the list of workers at a plantation will have no chanceof finding out their working conditions. Auditors alsoneed to be trained to recognise warning signs and toraise questions to detect the presence of bonded andtrafficked labour.
The revised RSPO P&C is very much improved, and wehave moved way beyond the starting point. The P&C
now requires growers to look into working conditions
for employees along their supply chains – including
their scheme and associated and independent
smallholders. If the RSPO P&C succeeds in getting apremium for sustainable palm oil, and more producers
are convinced to produce sustainably, then companies
will have to compete not just on the basis of palm oilvolume, but also in the manner oil is produced.
Verité is a global non-profit consultancy specialisedin labour standards. Its work includes monitoringand documenting labour rights and issues in the palm
oil industry.

29
RSPO IMPACT REPORT

Photo credit: Felda Global Ventures Holdings Berhad

PEOPLE
WHAT WE HAVE ACHIEVED
Understanding the prevalence of health andsafety incidents
There are three typical categories of accident in the oil palm
sector: cuts and thorn pricks sustained by field workers
are common and minor, but often require medical attention
to prevent infection; road accidents, which vary in severity;and mill accidents which are mostly minor and involve slips
and falls, but may occasionally result in severe disability or
fatalities. A desktop review of seven sustainability reports
found that the rate of lost time due to worker accidents
in certified plantations ranged from 0.50 to 46.24 per
200,000 working hours. The average number of lost days
per accident ranged from 1.3 to 2.53 days, reflecting theprevalence of field-based minor accidents, although one
company reported 287 lost days per accident.
It should be noted that data collection is not always
consistent and national reporting requirements vary, so
a comparison to provide a benchmark on the safety ofworking conditions remains a challenge.

RSPO P&C support mechanisms

30
RSPO IMPACT REPORT

Human Rights Working Group (HRWG)
In 2013, the HRWG was established following the
adoption of the human rights criterion in the revised
P&C. The working group is also responsible forreviewing the adequacy and clarity of other relevant
criteria, helping members to understand and develop
tools to effectively implement the UN Guiding Principles
on Business and Human Rights.
Photo credit: Felda Global Ventures Holdings Berhad

PEOPLE
Chemical reduction and the Paraquat debate
RSPO supports the minimisation of chemical use and promotes integrated pest management techniques that combine
natural pest management with limited amounts of pesticide. In integrated pest management, the use of pheromone traps,
manual weeding and the release of natural predators are widely used. The use of chemicals are primarily on immaturepalms and as a last resort in the case of major pest outbreaks.
The most prominent discussion about chemicals among RSPO members has been the use of the herbicide commonlyreferred to by its trade name Paraquat. Several stakeholders have raised concerns about the handling of the chemical due
to its high toxicity levels. RSPO P&C provide guidance that Paraquat can only be used in ways that do not endanger healthor the environment. Individual growers must work towards minimising and eliminating the use of Paraquat and documentthat they are actively seeking alternatives. In addition, the P&C have strict requirements on the safe handling, storage anddisposal of pesticides.
Over the past five years, most large RSPO grower members have voluntarily phased out Paraquat in response to
stakeholder concern. These growers have primarily used glyphosate and Basta as replacements.

Reducing Paraquat use
Outright ban
Tenaganita and Pesticide Asia are among the concerned NGOs and rights groups
campaigning for a Zero Paraquat policy to be adopted by the RSPO in response to
the health risk.

Better management
Wild Asia Group Sarawak offers outreach and training to independent
smallholders and has seen a decline in Paraquat use. Some smallholders reporthaving reduced their use of Paraquat from as much as 10–20 litres per hectare to
between 3–4 litres per hectare.

Voluntary phase out
Agropalma Group, Hap Seng Plantations Holdings Berhad, New Britain Palm Oil,
Sime Darby Berhad, Sipef Group, REA Holdings, Wilmar International Limited aresome of the RSPO members which have voluntarily phased out the use of Paraquat.

RSPO IMPACT REPORTOver the past five years, most large
RSPO grower members havevoluntarily phased out Paraquatin response to stakeholder concern.

31

PEOPLE
Right of children to an education
There is no comprehensive data on the number of children living on palm oil estates. Humana Child Aid Society, whichworks extensively in plantations, estimates there are on average 40 children per hectare of plantation. In light of this,the Malaysian National Interpretation (NI) of RSPO P&C has included children’s education as part of the obligation of asustainable palm oil grower.

32
RSPO IMPACT REPORT

Photo credit: Felda Global Ventures Holdings BerhadTHE CHALLENGE OF
CHILD LABOUR
There is no indicator in the overall RSPO P&C dedicatedto meeting the education needs of immigrant children.
It is a great omission as it is very difficult to defend theindustry when there are thousands of children living on
estates without access to education. We are very happy
that in the revised Malaysian National Interpretation,
there is a clause for children’s education, and this wasstrongly advocated by grower members.
Torben Venning
Project Director, Humana Child Aid Society
Humana Child Aid Society reaches out to thousandsof children living on plantations, offering good basic
education in accordance with the UN’s Child Right
Convention. Our work is situated in the state ofSabah, Malaysia.
We began on the cocoa plantations back in 1991 withjust 70 children. Today we have about 13,500 students,of which 11,500 are living in palm oil plantations.
We operate 135 centres licensed by the Ministry of
Education on an annually renewable basis. We employ
about 300 teachers from Sabah, but also from thePhilippines and Indonesia. We are not approved by the
Ministry of Education to run secondary schools but
there is now a Government to Government agreementwith the Indonesian government that we can establish
community learning centres for children of secondary
school age.

We are starting to see the impact of our work. We
have ten teachers who were themselves students inour schools. Some children are now working in theoffices of plantation companies. Through our facebook
pages, we have reconnected with children who are now
studying in universities in Indonesia.
We still have a lot of work to do. We are not reachingsmaller plantations, and even these are still relatively
big – smallholders and farmers have hundreds offamilies living in their holdings. This outreach will
require continued funding and support from the RSPOand companies working with smallholders.

Humana Child Society is an NGO focused on improving
access to primary education for children on Borneo.

33
RSPO IMPACT REPORT

There are over half a million male and female migrant
workers in Sabah. They are not supposed to havechildren and start a family, but the reality is that theydo. Almost all the children who come to our schools areborn here. We estimate that there are 40 children per
1,000 hectares of plantation. In Sabah alone, estimatesfrom Indonesian Consul General says that there arearound 50,000 Indonesian children living on estates.
This does not include children of workers from thePhilippines.

Anecdotal evidence suggests that children bringstability to the lives of workers. Some of the children
go through eight years of education at our centres,
which is a good indication of stability. When they know
their children are getting an education, workers are
more likely to stay settled because of the family unit.
Plantation companies benefit by reducing turnoverand retaining workers who are more experienced. We
receive calls from plantation managers asking us tostart schools in their estates because workers areleaving. Workers who are single tend to go in search of
better opportunities. And when children are in school,
it means that they are not out in the field.

PEOPLEPROTECTING THE RIGHTS OF
LOCAL COMMUNITIESThe rapid expansion and development of palm oil
plantations has at times been at the expense of local
communities. Conflicts over customary land (owned
by indigenous communities) and land rights haveovershadowed the potential benefits that the cultivationof palm oil may bring to local communities.

Our P&C on protecting local communities
Free, Prior Informed Consent (FPIC)RSPO certified growers must demonstrate thatplantation land has been obtained through informed,
non-coercive negotiations with local communities prior
to its establishment and development. The right to use
the land must not be contested by local people who candemonstrate that they have legal, customary or user
rights. The cultivation of oil palm must not diminish thelegal, customary or user rights of other users.

WHAT WE HAVE ACHIEVED
Accountability of members

34

Since the establishment of the RSPO complaints panel, 46
cases have been filed against members of the RSPO. Lack of
FPIC and cases where land use has been changed without
proper HCV assessment are the primary complaints raised
to the panel. Although the majority of complaints received
were brought by social and environmental NGOs, otherstakeholders such as communities, employees, government
agencies and the RSPO itself have raised complaints.

RSPO IMPACT REPORT

More complaints were filed in 2013 compared to otheryears. More than three-quarters of complaints received
relate to members in Indonesia and Malaysia, and we areseeing a growth in complaints in Africa as new plantations
are established and new members join RSPO.
Photo credit: New Britain Palm Oil Ltd

PEOPLERSPO P&C support mechanisms
Complaints system
The RSPO complaints system was established in 2009 to provide a framework to address complaints against any RSPO
member or the RSPO system itself. The system ensures that any alleged breach of specified RSPO Statutes, By-laws,
motions approved by the General Assembly, or any other approved articles, including the Principles & Criteria for
Sustainable Palm Oil Production, the Certification System and the RSPO Code of Conduct, are fairly, impartially andtransparently resolved.
The complaints panel comprises one member from each of the following: the supply chain, social NGOs, environmental
NGOs, grower and affiliate member

Status of complaints by year

• Open • Closed
Journey towards resolution

20

As of June 2014, 18 of the complaints filed have been
resolved and closed. A further five cases have been closed
but are awaiting resolution under the RSPO compensation
process (see page 44). The length of an active complaint,
from the time it is filed to the time it is closed ranges from
9 days to 1,600 days. It takes on average 340 days to resolvea case. Based on annual comparison, we have reduced theaverage length of an active complaint from 375 days in 2010,
to 311 days in 2013.

20

13
5
3
2
1

4

2

1

2009

2010

2011

6

2012

0
1
2013

30 June
2014

Countries of complaints
30

18

27

25

15

15

9

10

0

Types of complaints

6

15

20

35

15

10

5

3

2

10

9
5

5

1

0

2

2

FrancePNG

10
FPIC/NCR

HCV

Credibility
of CB

NPP

Burning

OthersIndonesia Malaysia

Liberia

Cameroon

RSPO IMPACT REPORT

5

PEOPLE
Status of complaints

20
18

15
11
10
6

5

5

0

3

Case closed

Action plan

Reviewing
response

Case closed formonitoring

Holding companies to account
While RSPO believes in constructive engagement, there
have been cases where companies have been unwilling tocooperate with complaints procedures or have knowingly
breached RSPO P&C or our Code of Conduct. In such cases,
RSPO may suspend members pending demonstrable
rectification or improvement. If this does not happen, the
RSPO Board of Governors, guided by the complaints panel,
can expel members. Since the launch of RSPO P&C, we
have suspended three members and expelled two following
complaints investigations.

Strengthening complaints procedures
Natural Justice and the Borneo Conservation Initiative
conducted a 2013 review and assessment of the RSPO
complaints procedure. The revised complaints system is
expected to meet the standard of the Ruggie Principles ofBusiness and Human Rights, which are endorsed by the UN
Human Rights Council. The revised complaints system will
be launched at the 2014 General Assembly.

36

Stronger FPIC guidance

RSPO IMPACT REPORT

Between 2007 and 2008, RSPO collaborated with the Forest
Peoples Programme to develop a ‘Guidance for Companies’
devoted to FPIC. RSPO member companies can and haveused this to guide their own procedures of land acquisition.
The RSPO Human Rights Working Group has also beentasked to review and update our FPIC guidance. Particularfocus has been placed on how companies and affected

Complaint
categorised2Complaint
received

1

1

Panel
convened

Non-cooperation

communities have experienced FPIC since 2005, lessons
from FPIC in other sectors, as well as the new requirement
on FPIC in the revised P&C. The working group will also
investigate how FPIC methods can be more effectively
integrated with our guidance on social impact analysis.

RSPO P&C support mechanisms
Dispute settlement facility
We believe that all our stakeholders desire andbenefit from fast and amicable dispute resolution.
In 2013, the dispute settlement facility (DSF) was
developed for members involved in cases of land
dispute. DSF is different from the complaints panel inthat, typically, both parties have agreed to bring theircase before an independent mediator.
There are six disputes currently being mediated by
DSF, four in Indonesia and two in Malaysia. All cases
originated in the complaints panel.

ADDRESSING GAPSIN LAND GOVERNANCE
Marcus Colchester, Senior Policy Advisor,
Forest Peoples Programme
My main complaint about RSPO is that its procedures
require a lot strengthening. Compliance to land grab
regulations and respect for customary rights are lacking.
FPIC is poorly understood and more poorly adhered toby the companies on the ground. We have done detailed
field studies comparing audit findings with our appraisal
and we feel that the assessment is weak.
Very few assessors are identifying and securing thebasic needs of communities defined in HCV5 (sites
and resources fundamental for satisfying the basic
necessities of local communities or indigenous peoples
which includes livelihoods, health, nutrition, water,
identified through engagement with these communities
or indigenous peoples). If the livelihood of communities
is not being accommodated, then they will either
retaliate, steal the fruits, or encroach on to other HCV
sites in the area. This undermines the environmental
principles of the RSPO.
The effectiveness of the complaints mechanism isquestionable and disappointing. The procedure isslow in moving complaints from reception to action.
There is a lot of detailed investigation involved because
companies do not agree. A lot of data is needed toprove the validity of the argument of the community,
which means a means a lot of work on the ground withthe communities as they require help to prepare and tounderstand how the procedure works.
There are also hundreds of complaints that communities
are not able to raise because of the lack of capacity andreach. Some communities are angry and resentful as
they have access to no other solutions form the state tosecure equity and justice. A lot of communities just makethe best of a bad job rather than keep fighting. This does
not mean that the company became compliant – just thatthe community gave up.

The new dispute settlement facility is an excellent
institution although it has yet to prove its effectiveness.
We are all trying hard to make it effective, which is why
we need the complaints ground to be clear.
I am worried about the new expansions. We haveinitiated two complaints about Liberia, and raised
complaints in Cameroon, Democratic Republic ofCongo and Nigeria. In Indonesia, 20,000 hectares is
considered a large concession. In Liberia companies
are getting 300,000 hectares in which they can choose
220,000 hectares from the government. People havebeen living on these lands since colonial days.
The credibility of RSPO is in the compliance. There
must be strong enforcement when there are violations
by members. I don’t think all violators should be
expelled, but RSPO could develop a graded scale ofsanctions to encourage companies to bring themselves
into compliance.
There are probably more than a dozen statements out
there of committing to additional standards. When
you compare them to the RSPO standard they stop
short of providing details on verification, procedures,accountability and compliance. We have to make the
RSPO work and bring it to the next level.

Marcus works extensively with human rights issues andcommunity conflicts in relation to palm oil. He is editor ofConflict or Consent? The oil palm sector at a crossroads,
part of a series of seven reports documenting the social
implications of oil palm expansion.

37
RSPO IMPACT REPORT

Photo credit: New Britain Palm Oil Ltd

Communities want RSPO to intervene and fill the gap ingood land governance. For one Malaysian community,
it 12 years to appeal at the federal court just to gain theright to appeal in court! In Indonesia, there is no justicethrough the courts at all.

PEOPLELESSONS AND FUTURE
CHALLENGES
Translating principles to procedures
The concept of FPIC has not translated to standard
operating procedures for most companies. When a company
fails to comply with the RSPO P&C, they may remedy thesituation but often this does not bring about change instandard procedures across operations.

Accessibility of complaints panel
We believe that the encroachment of land is continuing insome areas. Monitoring and reporting abuse of land rights
cannot be done using technology. We depend on the efforts
of social NGOs and local partners to raise these reports
through the complaints channel. Ensuring easy access tothe complaints panel is a key focus of the upcoming revisionof the RSPO complaints system.

Ground truth complaints
We are committed to ensuring that complaints areinvestigated with all due diligence, but recognise that ourcurrent complaints procedure does not involve investigating
situations on the ground. We are committed to ensure that all
future complaints will include a ‘ground truth’ component.

Encouraging dispute settlement
through mediation
By the end of 2014, we aim to train 20 mediators to support
DSF. We will also conduct a series of briefings for members
to learn about DSF and understand how it can be fully
utilised as a resource.

Finding ‘invisible’ workers

38

The exact prevalence of forced labour violations is unknown.
This is because trafficking is not segregated by commodity
or sectors. Due to the remoteness and size of estates,
plantations are rarely monitored, so there are few barriers
to prevent trafficked and undocumented individuals beingbrought to these sites. We will invest in more training forassessors to understand the issues of bonded labour. We
will also provide support development toolkits that will help
assessors identify warning signs during the course of theirassessment.

RSPO IMPACT REPORT

Photo credit: Kulim (M) Berhad/Björnberg

PIONEERING NEW
STANDARDS
Anne Rosenbarger
Research Fellow at Forests and Landscapes inIndonesia, People and Ecosystems Programme,
World Resource Institute.
RSPO is a pioneer in commodity standards, and otherstandards are now looking toward it as an example
in many ways. RSPO has done a good job of actuallyserving as a true roundtable in that from the beginning,it has done everything it can to utilize multi-stakeholder
decision making processes. It has been revolutionary in
opening lines of communication between stakeholder
groups and helping to build trust among groups andindividuals who might otherwise be skeptical talking
to and/or working with one another.
RSPO has definitely made an impact. In the last several
years, we have started to see a paradigm shift, withnumerous major companies across the supply chain
making commitments to ‘no deforestation’, respect tocommunity rights and livelihoods, and to supply chain
traceability. Many of these commitments are not yet
fully implemented; however, we’ve also seen a growing
trend in cooperation between companies and NGOs towork together to fulfill sustainability goals. I believethat the RSPO has played a key role in this shift.
As to whether RSPO is effective in slowing down
deforestation, I believe this impact is emerging and willcontinue to grow. We already see many site-specificexamples of improved land use planning and protectionof set aside areas in certified RSPO plantations;however, regional and national deforestation levels
often do not yet reflect these improvements. This ispartly because many RSPO members have not yet
fully implemented the standard, and more broadly,
there is still not enough participation in the RSPOfrom the sector as a whole. In particular, how to reachindependent smallholders and small to medium sized
producers remains a challenge.

Increased engagement and alignment with nationallaws and other certification schemes to help growers
overcome the challenge of complying with different
and sometimes conflicting requirements is of great
importance moving forward. For example, just because
an area is set aside as HCV under RSPO, does notmean it has legal protection in Indonesia. The RSPO
has already begun this work – (e.g. with the INA HCVTF) – but there is still more to be done.
We must also recognize that there is a big step between
RSPO membership and full certification. Translating
high-level RSPO commitments into best-practice
implementation and integration down to the plantationlevel is something most companies are still working on.
Responsive monitoring and enforcement of companies
in violation of the P&C is also a huge task that the
RSPO continues to build its capacity to efficiently
tackle. Therefore, moving forward, I believe it criticalthat the RSPO continue to promote transparency of
information from its members, specifically in regard
to development activities, operational policies,
supply chains, and corporate structure and to utilize
new technologies to build capacity for monitoringand enforcement, as well as for companies to beable publically demonstrate fulfillment of theircommitments to sustainability.

Forests and Landscapes in Indonesia is run by the World
Resources Institute (WRI). The project provides datadriven analysis to support government and civil society
actions for effective and equitable land-use in Indonesia.

39
RSPO IMPACT REPORT

Photo credit: New Britain Palm Oil Ltd

The effective implementation of free, prior andinformed consent (FPIC) is also still challenge for many
companies. Engaging with local stakeholders is often
a messy and time consuming process, with many sitespecific issues. Ensuring that proper FPIC processes
are followed is difficult to monitor and still relies heavily
on civil society organisations to bring problems to theattention of the RSPO.

PLANETOil palm grows in the tropical regions of the world,
regions that are also home to some of the world’s richest
biodiversity. But many of these ecosystems are threatened
by deforestation and fires related to crop cultivation. These
practices can devastate landscapes, push rare species ofanimal towards extinction and impoverish communities in
the long term. RSPO works extensively with its members
and in partnership with conservation experts to ensure thatthe positive benefits brought by oil palm cultivation are notoutweighed by a negative impact on the environment.

PROTECTING BIODIVERSITYRSPO is committed to stopping the deforestation of highconservation value (HCV) areas and minimise net GHG
emissions by avoiding area of high carbon stock for the
purpose of planting of oil palm. We also work to reduce thenegative impacts of palm oil production on the environment
by protecting HCV areas and rare, threatened and endangered
species in and around the estates of our members.

Independent approved HCV assessors
There are over 100 assessors approved by the RSPO to
conduct HCV assessments. In 2013, RSPO collaborated
with Wild Asia to conduct three HCV assessors’ trainings
in Cameroon, Thailand and Malaysia, training a total of 46
assessors.

40

Our P&C on protecting biodiversity
High conservation value (HCV) assessment
Use the HCV toolkit to assess and develop an
operations management plan for maintaining andenhancing HCV areas and rare, endangered andthreatened species, as well as sites that have socialand cultural values to local communities.
Environmental impact
Minimise and mitigate the negative impacts ofplantations on the environment, while enhancing
the positive impacts. Growers are to conserve
biodiversity, preserve essential ecosystem services,and respect cultural landmarks and community
access to natural resources.
New plantings procedures
In 2010, there was growing recognition that there
needed to be guidance and procedures in place for
RSPO members when establishing new plantations.
The New Planting Procedures (NPP) were adopted toprovide guidance on how and under what conditions
new plantings should be carried out.

RSPO IMPACT REPORTBUSINESS MEETSBIODIVERSITY IN
THE AMAZON
Marcello Brito
Commercial and Sustainability Director,
Agropalma Group.
We operate in Amazon region and local regulations
stipulat e that one hectare of forest must be left
untouched per hectare of plantation, regardless of crops.
We have gone beyond that requirement, and have about
1.6 hectares of forest per hectare of plantation.
We started our sustainability programme on a verysmall scale in 1999. We simply used to just leave theforest as it is. But we started to realise that we could doa lot more, although it was difficult for us: we are palm
growers, not specialist in biodiversity. In 2002, we wereasked how well we were protecting our forest and its
biodiversity. We could not answer the question.
In 2004, we engaged a bird expert and conducted our
first bird assessment and identification. We foundover 200 bird species in our area. Since then, we haveidentified over 480 bird species. More recently we haveconducted assessment and identification programmes
for mammals, reptiles, amphibians. These have helped
us to grasp the extraordinary richness of biodiversity
in the areas in which we operate. And in the future, wewill be conducting further assessment and identification
programmes for insects and aquatic fauna.
The biggest surprise for us is that we can prove that oilpalm plantation, forest protection, and preservation of
biodiversity can happen in the same area. We monitor

and see improvements in the number of species andin the populations of those species. Our estates areliving laboratories for what is possible if we work in theright way and complement economy with ecology. Of
course we have also had great help from partners suchas Conservation International and various university
partners in Brazil.
We often hear the criticism that everything we do isan added cost. While this is true – it has been a costfor us the past 15 years – in the last two years wehave seen the financial returns through the premiumfor our products. This now pays for all our social andenvironmental programmes.
We also hear our peers say that protection of
biodiversity is not their core business – it is for theNGOs and governments. But that is an old fashioned
way of thinking that we need to change. In the past
decades, we never really accounted for the real costof production. We never accounted for how much ofnature or the planet goes into our day-to-day products.
When companies come to internalise this cost, they will
see that they have to do more in the future.
The cost of production will increase everywhere. And
profit margins in Asia and parts of Africa will shrink.
Labour, land tenure, and expanding cities will increase
the cost of land. I believe that countries will impose
taxes on carbon in the future. So as a grower, we must
think long term and think smarter about issues suchas carbon footprinting and biodiversity protection assources of revenue and premium.

Agropalma is a Brazilian vertically integrated palm
oil producer operating across 40,000 hectares in the
Amazon region.

41
RSPO IMPACT REPORT

Photo credit: Kulim (M) Berhad/Björnberg

PLANETSix types of HCV area:• HCV1:	Areas containing globally, regionally or nationallysignificant concentrations of biodiversity values (e.g.
endemism, endangered species, refugia).
• HCV2:
	Globally, regionally or nationally significant large
landscape-level areas where viable populations of most,
if not all, naturally occurring species exist in natural
patterns of distribution and abundance.
• HCV3:
	Areas that are in or contain rare, threatened or
endangered ecosystems.
• HCV4:
	Areas that provide basic ecosystem services in criticalsituations (e.g. watershed protection, erosion control).
• HCV5:
	Areas fundamental to meeting basic needs of local
communities (e.g. subsistence, health).
• HCV6:
	Areas critical to local communities’ traditional cultural
identity (areas of cultural, ecological, economic or
religious significance identified in cooperation with such
local communities).

RSPO P&C support mechanisms

42

Biodiversity and High Conservation Values
Working Group (BHCV WG)
Since 2009, the BHCV WG has provided technical input tosupport the practical application of the RSPO P&C andthe HCV framework. The group develops information
resources and toolkits to facilitate the work of HCV
assessors. It also organises and synthesises information,and commissions reviews of studies to improve guidance
for the application of the HCV framework methodology.

RSPO IMPACT REPORT

Compensation Task ForceThe Compensation Task Force was established in August
2011 under the BHCV WG. The purpose of the task force
is to develop and test a framework to guide members
through the process of compensating land cleared
without prior HCV assessment.

Photo credit: Felda Global Ventures Holdings Berhad

DOES RSPO MAKE A
DIFFERENCE?
A PERSPECTIVE FROM THE
LOWER KINABATANGANHUTAN – Kinabatangan Orangutan
Conservation Programme
As a grassroots non-profit organisation carrying out
research and addressing human-wildlife conflict issues
in the Lower Kinabatangan floodplain over the past
16 years we have seen conflicts between people andnature grow. We have also seen positive changes in
how local communities view wildlife and the forest andin recent years we have also seen positive changes inpalm oil companies that want to achieve and maintain
Roundtable for Sustainable Palm Oil (RSPO) certification.
We engage with oil palm companies in different ways.
Our Honorary Wildlife Wardens (HWW) mitigate humanwildlife conflict on site within the Lower Kinabatangan.
We also conduct environmental awareness education
with children and adults within local communities inrural areas because most environmental awareness isdone in urban areas. However, rural local communities
have the most interaction or are “adjacent” to forested
areas. We also work with other NGOs, and recently webegan to engage with oil palm plantations as well via
environmental education.
In our patrols on the ground, we see a connection
between how workers are treated and the poaching of
wildlife. And the difference between RSPO and nonRSPO companies is quite clear. When our Wardens go
into non-RSPO plantations, they see evidence of illegal
poaching and hunting such as generator-powered
freezers that are used to store the kill before it is sold.
These workers poach to supplement their income aswell as for consumption.

From the study we know that majority of orangutans do
not go far into plantations. In fact, 90 % were detected
within 100 meters of the forest edge. So buffer zones
and riparian area have been utilised, demonstrating themeans by which plantations can offer as safe passage
for orangutans.
This observation is specific to the Sabah region, and adifferent situation may prevail in Indonesia. We need tostart engaging RSPO members who have orangutans intheir concession areas. Companies need to be active inmanaging this issue, especially with out-growers who
are legally converting forest in their land title.
RSPO has played an important role in the dialogue
between growers and NGOs. We see improvements
in managing wildlife conflict and companies are now
more patient with wildlife crossing their estates.
Communication from headquarters on managing
plantations within RSPO guidelines is happening, but
can be improved.
The RSPO compensation mechanism provides anopportunity to partner on projects to protect forest or
re-establish riparian and buffer zones. We don’t want
to expel or otherwise punish companies: we need themto fix the issues on their own land. Riparian and bufferzones along rivers play an important role in controlling
pollution in rivers – as evidenced where rivers in otherparts of the world have been rehabilitated – and we
think that these initiatives will give the Kinabatangan
River a chance to recover.

In 1998, HUTAN set up the Kinabatangan Orang-Utan
Conservation Programme (KOCP) as a collaboration
between the Lower Kinabatangan community and the
Sabah Wildlife Department

43
RSPO IMPACT REPORT

We have recently published research of our observationsof how orangutans use the oil palm landscape. What
we have found is that orangutans do travel through oilpalm plantations to get to other sites. We have seen
them nest in single trees in the plantation and in somecases we have found nests in oil palms. Orangutans’diet is very varied. They consume more than 300

species of vegetation. But in an oil palm plantation,
fresh fruit bunches are the only food available. They
also find navigating through the vastness of palm oil
plantations stressful.

PLANETIn a few cases, RSPO palm oil producers were found tohave cleared land without conducting the required HCV
assessment. RSPO takes such breaches very seriously, butprefers to work on constructive solutions rather than to
exclude producers from the certification system.

A compensation matrix for members to calculate how muchthey have to remediate or compensate for any HCV cleared
without an assessment has therefore been developed. The
liability takes into consideration size of land cleared, when
the land was cleared, and status of RSPO membership at
the time it was cleared.

In March 2014, the RSPO Board of Governors accepted
the recommendations of the Compensation Task Forceto start a staged implementation of the Remediation andCompensation Procedures. This staged implementation isdesigned to gather additional information and experiencesin order to further refine the procedures.

The RSPO compensation process provides different
options for members to compensate. Members can carryout onsite remediation or offsite remediation in partnershipwith the government, the community or with an NGO. The
compensation proposal must be proportionate to thehabitat lost.

All RSPO members who own and or manage land for oilpalm production must comply with all sections of theRemediation and Compensation Procedures, up to andincluding Section 7: ‘Calculating conservation liability’.
Companies are required to disclose any non-compliant
land clearance by end of July 2014 and submit a Land Use
Change analysis by end of September 2014.

Eight grower members are currently undergoing thecompensation process. Five cases originated from thecomplaints panel and three members have come forward
on their own initiative as they recognise that they may havepotentially cleared land without prior HCV assessment or
acquired plantations from non-RSPO members that may
have previously comprised HCV areas.

Remediating and compensating for HCV loss

44
RSPO IMPACT REPORT

Photo credit: Felda Global Ventures Holdings Berhad

PLANETRSPO compensation matrix
Declaration year

Land controlled by a nonmember at the time ofclearance

Land controlled by a RSPO
member with no certified
management unit(s) at thetime of clearance

Land controlled by agrower with RSPO certified
management unit(s) at thetime of clearance Certified

Land cleared after
Nov 2005 – Nov 2007

Only for HCV 4, 5, 6

Only for HCV 4, 5, 6

Not applicableLand cleared between
2007 and 31 Dec 2009

Only for HCV 4, 5, 6

Area cleared without HCV
assessment x vegetation
coefficient in Nov 2005

Area cleared without HCV
assessment x vegetation
coefficient in Nov 2005

Land cleared between
1 Jan 2010 – 9 May 2014

Area cleared without HCV
assessment x vegetation
coefficient in Nov 2005

Area cleared without HCV
assessment x vegetation
coefficient in Nov 2005

2 x the sum of area cleared
without HCV assessment
x vegetation coefficient in
Nov 2005

Future land clearing after
9 May 2014

Area cleared without HCV
assessment x vegetation
coefficient in Nov 2005

Expulsion

Expulsion

Palm products from landwith vegetation coefficientof >0.4 may not be claimed
as RSPO certified

Mapping changes of use in members’ land
In November 2013, RSPO released a series of technical papers to inform the ongoing discussion within the RSPO on
greenhouse gas emissions and land use change in Indonesia, Malaysia and Papua New Guinea. The findings wereincorporated into the Global Forest Watch Commodities platform in order to indicate historical land use change and assist
growers in complying with the new criterion on comprehensive high conservation value (HCV) assessment.
The new criterion requires that a comprehensive HCV assessment, including stakeholder consultation, is conducted prior
to any conversion or new planting. This assessment includes a land use change analysis to determine changes to thevegetation since November 2005. This analysis is used, with proxies, to indicate changes to HCV status.

45
RSPO IMPACT REPORTPLANET
Transparency in new plantings
As of June 2014, the RSPO has received 100 notifications of new planting covering 1,140,683 hectares in 10 countries. Over
half of new plantings are planned in Indonesia. The most notable new growing areas of palm oil are in Liberia and Cameroon,
which account for almost 15% of new planting notifications. There is currently no certified palm oil produced in these twocountries. Around 159,656 hectares or 14% has been set aside for conservation.

New Planting Procedures
1.	A comprehensive independent social and environmental
impact assessment must be undertaken.

New planting notifications by country(As of 30 June 2014)
Country

HectaresIndonesia

828,470

Liberia

98,485

3.	A comprehensive HCV assessment must be conducted.

Cameroon

69,975

4.	Protection and management plans must be developed
for primary forest and any HCV in the concession areas.

Gabon

67,179Papua New Guinea

51,178

5.	A third party independent audit and verification must
be conducted.

Cambodia

10,719Nigeria

5,594

Costa Rica

4,145

Ghana

3,715

Brazil

1,223

2.	Free, prior informed consent from affected communities
must be obtained and be fairly compensated.

46
RSPO IMPACT REPORT

Photo credit: New Britain Palm Oil Ltd

GROWTH FOR A SUSTAINABLE
FUTURE
Bumitama Agri Limited
A subsidiary of Bumitama, PT Bumitama Gunajaya
Agro (“BGA”) has been a member of the RSPO since2007. Back then, the objective of our membership was
to be associated with a global certification system
relevant to the palm oil industry. After the success of
our public listing in 2012, we became more visible, andhave received more enquiries from other stakeholders,in particular the environmental NGOs.
Our initial engagement with the environmental NGOs
was challenging. We seemed to look at different
perspectives even though we have convinced theNGOs on the seriousness of Bumitama to follow
RSPO’s standard. Our focus in business has always
been to ensure that our presence should make apositive impact to the community in the areas that we
operate in. This can be seen through our active social
engagement and activities such as through plasma
program, infrastructural development, economic
empowerment programs, improving and developing
education facilities, health service and other culturalactivities. At the same time, we have also ensured ourcompliance with the Indonesian law and regulation
including the environmental aspect.

Following the meeting of our Chairman and CEO
with the RSPO secretariat in Kuala Lumpur together
with several executive board members and advisors,
we decided to stay and move our membership from
BGA to the level of the listed company, Bumitama.
We halted plantings for many months to ensure
understanding with the complainants, and also, theindependent audits and New Plantings Procedures
were undertaken. We made declaration and subjected
ourselves to the Compensation Taskforce. We havesince completed and submitted seven new planting
procedures, certified one of our concessions withanother concession in the pipeline, and awaiting for a
remediation panel to be established.
Our engagement with the environmental NGOs
has been a rewarding learning process. In the past,
we would have kept NGOs at arm’s length, but ourengagement now is much stronger. We actively
communicate with the NGOs and invite them to jointly
investigate issues on the ground, as well as invite
technical advice on our remedial and conservation areas.
Our works are still in progress, but through the RSPO’s
P&C and constant interaction with RSPO secretariat,
we are confident that we will continue to improve ourinternal processes. We are first and foremost a planterbut recognize that things have changed, and we mustembrace this change to operate differently and in asustainable manner.

Bumitama Agri Limited (“Bumitama”) is a palm oilcompany with land concession of over 200,000 hectares,
mainly in Central and West Kalimantan. Bumitama isa public listed company on the Singapore Stock
Exchange (“SGX”).

47
RSPO IMPACT REPORTIn 2008, we initiated a systematic implementation of
RSPO processes. Towards the end of 2012 to mid of
2013, complaints against us were submitted to the
RSPO. We have made efforts to work with the NGOs,but encountered challenges of reaching the same
perceptions. This hindered both sides from achieving
resolutions on these complaints. During this process,we evaluated the value of the RSPO membership. Our
crude palm oil products are only sold in Indonesia.
We are an upstream mid-size plantation company. On
the other hand, the regional and national government
have revised and released new regulation that createduncertainties to the business climate and therefore, wemust take some corrective actions to be in compliancewith the new rules and regulations. However, withthe strong commitment of our Chairman and all the
management team, Bumitama is strived to be asustainable company by complying with RSPO’s P&C,
respecting the people, environment and its stakeholders;
resulting in rapid changes in the system, procedures,
attitude and understanding of Bumitama’s team.

PLANET
REDUCING GREENHOUSE GAS(GHG) EMISSIONSOur P&C on GHG emissions

Understanding and managing greenhouse gas (GHG)
emissions is an issue of global importance and the palm
oil industry is no exception. Palm oil has been the focus ofparticular attention because of potential GHG emissions
relating to the cultivation of palm oil on peatland, land-use
change in existing and new plantations, and in processing
and production facilities.

Reduce GHG emissions in existing plantations:Plans to reduce emissions of greenhouse gases aredeveloped, implemented and monitored. Managementof peatland is guided by best management practiceon existing peatland and restoration of peatland using
local species.

Emerging picture of our carbon footprint

Avoiding peat:
Extensive planting on peat is to be avoided.

A number of RSPO certified growers have used the
PalmGHG calculator and have subsequently publishedcarbon footprint reports. These reports cover plantation
operations in Papua New Guinea, Malaysia and East
Kalimantan.

Public reporting:
Growers commit to report their GHG emissions from
1 January 2017.

A review of these reports found:•	Carbon per tonne of CPO ranged from 0.90 to 2.30
tonnes CO2eq•	Carbon per tonne of PKO ranged from 0.22 to 5.88
tonnes CO2eq•	The two largest sources of emissions from all threeestates were from land use change and palm oil milleffluent (POME). In two estates, emissions from peatland
was the third largest source, while in the estate with noplanting on peat, nitrogenous oxide from fertiliser was
the third largest source of emissions.

RSPO P&C support mechanisms
Emissions and Greenhouse Gas Reduction
Working Group (ERWG)
The ERWG will further develop and improve the
PalmGHG calculator and the carbon assessment tool
through continued engagement with companies. The
implementation period ends on 31 December 2016.

48
RSPO IMPACT REPORT

Photo credit: Felda Global Ventures Holdings Berhad

KEEPING GHG REDUCTION
ON TARGETREA Group
Using the PalmGHG tool has helped REA to better
understand the main sources of GHG emissions within
the company’s operations and to identify opportunities
for achieving reductions, setting targets and monitoring
progress towards achieving them. The estimationof REA’s GHG emissions for 2011 provide a baseline
against which reductions achieved as a result of thecommissioning of methane recovery plants at our two
palm oil mills in 2012 can be monitored. This major
investment is expected to make a material contribution
to reducing REA’s GHG emissions through the captureof the methane emitted by the palm oil mill effluent(POME) and the conversion of this gas to electricity.
The electricity produced will replace the use of dieselpowered generators for both operational and domestic
purposes, thus reducing our diesel consumption andthe carbon dioxide emissions associated with it.
Using the PalmGHG tool means that we are now ina position to report our GHG emissions to investors,
buyers and the RSPO, as and when required. The ability
to monitor and report on our net GHG emissions will
provide a quantitative and credible indicator to measure

our sustainability performance, which can be conveyed
to our stakeholders in a clear, transparent manner.
As with any tool, the estimate of GHG emissions
produced by the PalmGHG tool will only be as
accurate as the data used to perform the calculation.
Therefore, companies are advised to ensure thatthey keep accurate records of the parameters
required to perform this calculation. This includes:
obtaining satellite imagery, conducting a carbon
stock assessment of the vegetation present prior toland clearing, inputs used by smallholders, fossil fuelconsumption by the company and external contractors,
electricity consumption, fertiliser consumption and thevolume of POME produced.

The REA group is principally engaged in the cultivation ofoil palms in the province of East Kalimantan, Indonesia.
They are in the production of crude palm oil and crude
palm kernel oil. The Group published its first standalone
carbon report in 2013.

49
RSPO IMPACT REPORTPLANET
WHAT WE ACHIEVED
Recognition of GHG emissions from peatlands
GHG emissions from peatland drained for palm oil
cultivation is one of the largest sources of GHG emissions
on a plantation. RSPO P&C were revised to encourage theavoidance of planting on peatland. It is estimated that oilpalm plantations on peat increased from 418,000 hectares
in 1990 to 2.43 million hectares in 2010. Today, peatland
plantations account for approximately 18% of total oil palmarea. The largest absolute extent of plantations on peat is in
Sumatra, estimated at 1.4 million hectares.

Facts about peatland
Peatlands are areas of wetland with a thick, waterlogged organic soil layer known as peat. Peat is
made up of dead and decaying plant material.
Peatland provides important ecosystem services tolocal communities, and is home to many threatened
species. In recent years, its importance as a carbon
store has come to be widely recognised, with anestimated 550 gigatonnes of carbon stored globally,
twice as much as is stored in the world’s forests.

Field-testing the PalmGHG emissions calculator
Developed over two years of consultation, the PalmGHG
calculator was made available for use by all members at
the end of 2012. Reviewed and refined by a panel of experts
in palm oil lifecycle assessment, the PalmGHG calculator
is currently being trialled with a deadline for all growers
to publicly disclose their GHG emissions and reduction
strategy beyond 31 December 2016.

Testing and refining
The Emissions Reduction Working Group is reaching out
to companies embarking on new planting developments
to pilot the RSPO carbon assessment tool for new oil palm
planting. The pilot will allow testing and review to ensurecompliance with the criterion on reducing emissions fromnew plantings.

50
RSPO IMPACT REPORT

Photo credit: Marcel J. Silvius, Wetlands International

PEATLAND AND
THE LINK TO
GREENHOUSE GASES
Marcel Silvius
Programme Head, Climate Smart Land Use,
Wetlands International
A lot of has changed in regards to the recognition of
GHG emissions in the cultivation of sustainable palmoil. In the early days, RSPO members were not willingto consider GHG emissions. When the science-based
report from GHG Working Group 1 came out, noconsensus could be reached because the data was notvery pleasing to many members.
By the time GHG Working Group 2 was set up,
members had found time to go through the reportand have discussions, and even the most tenacious
GHG deniers were convinced there was a problem,
particularly in relation to peatlands.
In and outside of the RSPO, awareness onenvironmental issues has increased incredibly. Thereis now an understanding that palm oil plantations onpeat will never be sustainable due to GHG emissions,as well as the soil subsidence issue which in mostpeatlands will lead to frequent flooding and willrender in the foreseeable future most plantations
on peat unproductive. On the other hand, you cannot
expect growers who have made a major investment
to immediately cease their existing operations on
peatlands.
I think the new RSPO P&C present a major
improvement. Growers now need to monitor and reporttheir GHG emissions and peat soil subsidence. They are
required to check how far they are from the drainage
limit in peatland areas and if there is a risk of floodingin the next crop cycle. If so, they need to consider
rehabilitation and alternative use of such areas. There
are also criteria and indicators that require avoidanceof peatlands in new developments. However, the new
P&C does not require growers to immediately develop aphasing-out plan of peat from their plantations, which
is what I would like to see.
The PalmGHG tool is now under a three-year testing
and review process. When the GHG reporting becomespublic, it will be a tool for a market-driven process
to source from the grower with the smallest carbon
footprint. Clients will want the cleanest palm oil. Dirty
palm oil will pose a brand risk, and that will impact
pricing.
While we have made these major steps forward within
the RSPO, one of the failures of RSPO is that it has not
sufficiently campaigned for a level playing field. We
have won a battle but we are losing the war. The areaof unsustainable oil palm plantations is expanding
unabated. The RSPO is being held accountable for this,even though it is government that issues the licenses
and enables business as usual. The RSPO wants toachieve 100% sustainable palm oil from the sector.
Therefore the RSPO, as a multi-stakeholder initiative,
must expose the irresponsible part of the sector
and actively campaign to convince governments, inparticular the Indonesian and Malaysian governments,
to stop environmentally destructive practices.

Wetlands International is a global not-for-profit
organisation dedicated to the conservation andrestoration of wetlands. Marcel Silvius is the author ofover 50 scientific articles and reports in this area.

51
RSPO IMPACT REPORTPLANET
WHAT WE HAVE ACHIEVED
Leveraging technology in fire monitoring
Fire, whether accidental or set deliberately to clear land,
is one of the greatest threats to forests and wildlife inSoutheast Asia. RSPO P&C contain an unequivocal ban on
the clearing of land and the disposal of waste by burning.
However, accidental fires and fires spreading fromsurrounding areas are an ongoing concern. In addition
to threatening biodiversity, fires also contribute to theso-called ‘Asian haze’ – a blanket of sooty fog that severely
impacts health and productivity.
In August 2013, during a particularly severe haze incident,
RSPO launched Eyes on the Haze. This initiative addresses
the lack of accurate maps in the public domain – a major
challenge in monitoring and remedying the causes of haze.
Eyes on the Haze overlays digital maps of RSPO certified
areas with hotspot data from NASA. Through satellite
imagery, we are able to demonstrate online whether RSPO
certified areas are free from fires. When a hotspot appears
in a certified area, the company operating at this location
is asked to verify the fire, explain how it is being managed,
and state when it will be extinguished. These reports arearchived and published on the RSPO website.
A resolution passed in the 2013 General Assembly
demands that all grower members must now submit
digital maps of their concession boundaries to RSPO by Q4
2014. Moving one step ahead, in partnership with Global
Forest Watch and through its Commodities Platform, the
RSPO will provide maps detailing concession boundaries,
including certified and new planting areas, for online
deforestation and fire monitoring. Maps of certified
members is already available online.

52
RSPO IMPACT REPORT“We are starting to see a remarkable shift as newtechnology is encouraging companies to share
information and work collaboratively to improve forest
management. The RSPO and its member companies
are now leading the palm oil industry towards greatertransparency.”

Dr. Andrew Steer
President & CEO, World Resources Institute

53
RSPO IMPACT REPORT

Photo credit: Marcel J. Silvius, Wetlands International

PLANET
SOIL AND WATERGood agricultural practices are fundamental to maintaining
plantations that are sustainable in the long term. Promoting
improved farming practices that maintain and improve soil
fertility increases FFB yields per hectare.

WHAT WE ACHIEVED
Understanding the water footprint of CSPOIn 2013, based on reviews of four published sustainability
reports, the average amount of water needed to processa tonne of FFB was 1.29* tonnes. Over five years, this hasremained consistent, averaging 1.22 tonnes of water per
tonne of fresh fruit bunch (FFB).

Understanding BOD discharge levels
Based on reviews of published sustainability reports,
the discharge of Biological Oxygen Demand (BOD fromcertified estates in 2013 ranged from 58 to 114 parts per
million (ppm), with an average discharge of 86ppm**. One
company reported a BOD reduction trend of 61% over 5
years. Investment in new mill plants and the installation of
biogas plants has helped to improve BOD levels. Although
there has been improvement, the average BOD in mostof the mills disclosed is still higher than the World Bank
recommendation of 50ppm.

Our P&C on soil and waterBest management practice on soil:
Improve soil fertility at a level that ensures optimaland sustained yield. Implement best practices suchas the minimisation of soil degradation, the control ofsoil erosion, biomass recycling, planting on terrace,and the regeneration of vegetation.
Best management practice on water resources:
Water management plans must take into accountthe efficiency of use and renewability of sources.
Operations should provide a riparian zone, and avoid
contamination of surface and ground water throughrun-off of soil, nutrients and chemicals, and palm oil
mill effluent.
Access to water by local communities:
Ensure that the use of water does not adversely impact
on other users within the catchment area, including
local communities and customary water users. Aim
to ensure that local communities, workers and theirfamilies have access to adequate, clean water for
drinking, cooking, bathing and cleaning purposes.

*	Average data sourced from sustainability report of FGV Holdings
Berhad 2013, Wilmar International Limited 2011, Kulim Berhad 2013
and New Britain Palm Oil 2013**	Average BOD data sourced from sustainability report of FGV Holdings
Berhad 2013, Wilmar International Limited 2011, Kulim Berhad 2013

54
RSPO IMPACT REPORT

Photo credit: New Britain Palm Oil Ltd

SEIZING THE OPPORTUNITY
TO CONSERVE A SPECIES
Pak Budi Purwanto
Head of Sustainability, PT. Pasifik Agro Sentosa
In West Kalimantan our subsidiaries PT Cipta
Usaha Sejati and PT Jalin Vaneo have concession
areas totalling around 40,000 hectares in Kayong
Utara Regency. In 2010, we had a plan to set aside
9,775 hectares to protect HCV areas within theseconcessions. As well as conserving biodiversity, theconservation area would connect Gunung Palung
National Park and Gunung Juring protected forest.
The aim was to provide a biological corridor for rare,endangered and threatened species living in thenational parks, particularly the orangutan and thebekantan or proboscis monkey.
We asked Fauna & Flora International (FFI) to help guide
us in the development of these projects as they had therelevant expertise. Over a period of over four years, FFI
helped us develop the management framework andtrained our staff on patrols of the area. We continue toimprove our management of this area and are looking to
implement a SMART (Spatial Monitoring and Reporting
Tool) patrol monitoring system.
We also engage with local communities who live aroundour concession areas in order to raise their awarenessof the need to protect orangutans and bekantan. In our
engagement, we do come across orangutans being kept
in villages, and we encourage communities to release
them back into the wild Five have so far been released

into the National Park through Badan Konservasi
Sumberdaya Alam (Natural Resource Conservation
Agencies) Kalimantan Barat Province.
We do get questions from peers as to why we set
aside this area. From a business perspective, setting
aside 25% of a plantation area is significant. From ourperspective, our motto is ‘go sustainable forever’ andwe feel it is important that our work on the groundreflects this ambition.
Our investment in the conservation area is also
starting to pay off. On the national level we contributeto the presidential decree to reduce greenhousegases (GHG) by 26% by 2020. FFI has calculated that
our conservation area has potentially avoided GHG
emissions of 5.18 million tonnes of CO2 equivalent over
30 years or 0.17 million tonnes of CO2 equivalent per
year. We believe that we can contribute more since theresults of our other emmission reduction plans, suchas from best practice operations, has not yet been
calculated. We are now also piloting the conservation
area as a REDD+ project (United Nations collaborative
initiative on Reducing Emissions from Deforestationand forest Degradation).

PT. Pasifik Agro Sentosa is a holding of palm and sugar
agribusiness companies. Based in Indonesia, the company
has expanded its plantations to several islands such as
North Sumatra, West Kalimantan and Southeast Sulawesi.

55
RSPO IMPACT REPORTPLANETLESSONS AND FUTURE
CHALLENGES
Investment in technology
We will continue to leverage advancements in informationand digital technology. These advancements offers us thepotential to provide more transparency, accountability andevidence of impacts.

Supporting practice on the ground
There needs to be more convergence from concepts
and policies to practice. Companies increasingly needto demonstrate transparency about how HCV areas are
identified, how training is provided to employees, and theeffectiveness of management planning through disclosureof monitoring.

Robustness of assessment

56

From 2015, the HCV Resource Network will be theaccrediting body for our HCV assessors. This will ensurethat HCV assessors are qualified and our certification robust
and credible.

RSPO IMPACT REPORT

Building technical capacity
There is a need for more engagement with growers tounderstand their capacity to assess, implement and monitor
HCV and GHG. Through our members, expertise andsupport can be leveraged to build expertise on the ground.

Water impacts
As water hotspots emerge due to climate change, andas the expansion of sustainable palm oil continues intoless developed areas where local communities dependon rivers for their livelihoods, there is a need for greater
understanding and monitoring of impacts of operations on
local communities.

Research of effectivenessSocially and Environmentally Sustainable Oil Palm Research(SEnSOR) is an integrated multi-disciplinary impacts andresearch programme. The five-year programme is designed
to quantify the impacts of RSPO certification and fill key
knowledge gaps in the areas of soil and water, greenhousegases and air quality, biodiversity, participatory processes
and rights, and livelihood.

Moving members to become certified
The RSPO is a voluntary membership organisation. With
just one third of our grower members currently certified,
we need to ensure that more grower members movetowards certification, including smallholders. Through the
ACOP, growers will be mandated to develop a time boundcertification plan after joining RSPO.

57
RSPO IMPACT REPORT

Photo credit: Felda Global Ventures Holdings BerhadPROFIT
Real transformation of the palm oil market can only beachieved through the concerted actions of RSPO members
and partners. All along the complex palm oil supply chain,members and partners must continue to assess theircontribution towards making sustainable palm oil the norm.
Yet we are beginning to see changes that will positively
affect the participation and profitability of companies.
These include the development of new national legislations
on imports of sustainable commodities, the definition ofsustainability criteria to support access to finance, and thecommitments of new independent players.

IMPROVING YIELDS FOR
SMALLHOLDERS
There are an estimated 3 million oil palm smallholders
worldwide. Together they produce around 4 million tonnesof palm oil – around 40% of total global production. In
countries such as Thailand and Nigeria, smallholders are
the primary producers, making them a vital part of thenational palm oil supply chain.
However, smallholders traditionally face many challenges.
They lack knowledge about good agricultural practices andlogistics, and have difficulty in gaining access to markets.
Due to their smaller plot size, independent smallholders
are less efficient than other producers. Their yields are
generally much lower than those of commercial plantations.
A number of projects aimed at assisting smallholders
have identified further critical issues, such as the use ofpoor quality seedlings, maintaining old palms, applying
insufficient fertiliser, harvesting unripe FFBs, and poor
data management.
It is imperative that smallholders are able to participate in
the supply chain if sustainable palm oil is to really become
the norm in the market. RSPO certification is designed
to support smallholders to improve their livelihoodsby targeting the key factors that make a big difference:
improved management practices, better quality fresh fruitbunches (FFB), increased yields and access to markets.

58
RSPO IMPACT REPORT59

RSPO IMPACT REPORTPROFITRSPO P&C SUPPORTMECHANISM
Smallholders Working Group (SHWG)
The Task Force on Smallholders was expanded into the
Smallholders Working Group in 2012, reflecting the RSPO’s
long-term investment in this important stakeholder group.
The working group facilitates and supports the developmentof our global smallholder knowledge base and promotes
knowledge sharing between different countries andinitiatives. It also promotes the development of support
mechanisms and partnerships that can help overcome
barriers to adopting sustainable production practices andsecuring RSPO certification. The working group reviews
the relevance, effectiveness and impact of RSPO P&C andSupply Chain Certification with regards to smallholders, andproposes adjustments to both national and generic RSPO
documents.

Traceability and Legal FFB Working GroupRSPO certifies palm oil at mill level. This means that
smallholders currently have no means of becoming
certified if their local mill is not certified. In addition,a large proportion of smallholder fruit is sold throughagents and traders, creating a big gap in traceability. This
prevents smallholders from receiving relevant premiums
and impedes the mills’ ability to ensure that their fruit issustainably sourced. In response, the Board of Governors
created the Traceability and Legal FFB Working Group inJune 2014 to improve the traceability gaps that currently
exist from independent smallholders or uncertified supply
base to a certified mill.

60

Defining smallholders
RSPO has defined two working categories ofsmallholder:
Scheme smallholders
Scheme smallholders are structurally bound bycontract and credit agreement to a particular mill.
They are advised and supervised on planting and crop
management techniques. They are often organised
and directly overseen by managers of the estate towhich they are structurally linked.
Independent smallholders
Independent smallholders sell FFB directly or throughintermediaries to a number of mills. They are selforganised, self-managed and self-financed, withsome support from government agencies.
RSPO provides two types of certification to matchthe specific needs of each category: independent
smallholders may choose to be certified on their own
or as a group under the independent smallholders’certification.

RSPO IMPACT REPORTPROFIT
WHAT WE HAVE ACHIEVEDRSPO has certified scheme smallholders in six countries. As of June 2014, certified scheme smallholders plant on 231,996
hectares of land. 74% of this land is concentrated in Indonesia and Papua New Guinea. Scheme smallholders supply 1.6
million mt of FFB, which translates to an estimated 315,000 tonnes of CSPO and 78,000 tonnes PKO. This represents about
3 percent of CSPO produced in 2013.
As part of their commitment to RSPO P&C, growers who have certified all their estates must certify all their scheme
smallholders three years after their estates are certified. As of June 2014, at least 50 certification units have certified
scheme smallholder into their supply base.

Certification of scheme smallholders (Ha)• Indonesia• Papua New Guinea• Malaysia• Solomon Islands

39,456 (40%)

34,003 (34%)

13,798 (14%)

1,011 (1%)• Colombia
1,464 (1%)

10,117 (10%)

61
RSPO IMPACT REPORT• Côte d’Ivoire

PROFIT
Certification of independent smallholders
In 2012, a group of smallholders in Thailand became the first to be certified under the RSPO Group Certification scheme.
Since then, seven independent smallholder groups representing 3,037 individual smallholders in three countries have beencertified. This amounts to 14,148 hectares of land planted by independent smallholders, producing 199,628 tonnes of FFB
and 47,077 tonnes of CSPO.

Group certification of independent smallholders• Indonesia
746 (5%)• Malaysia

10,637 (75%)• Thailand

2,765 (20%)

62
RSPO IMPACT REPORTPROFIT
Number of independent smallholders under group certification

2,500

2,290

2,000

1,500

1,000

500

349
159

158

Thai UPOIC

Thai Univanich

42

39

Malaysia
WAGS

Thai Surathani0
Malaysia Felda

Indonesia Amanah

63
RSPO IMPACT REPORTPROFIT
Yield improvement for independent smallholders
RSPO members and partners have documented theimpact of their work with smallholders. These casestudies demonstrate the benefits gained by independent
smallholders and mills in the implementation of RSPO P&C.

Impact• 10–15% reduction in
fertiliser costs• Yield increased 3 tonnes
per hectare• 0.1 THB/kg FFB

Economic Value Added

Sustainable smallholders
GIZ Project, Thailand
A project funded by GIZ partnered four private mills
and one co-operative in order to achieve sustainablepalm oil production for independent smallholders
in Thailand. Approximately 500 smallholders in
Krabi, Surattani, Trad, and Srakaew were provided
with technical support for over two years. The groupsuccessfully received RSPO certification in July 2012.

• Average farm size of
7 hectare•U SD 3,000 USD/year
to smallholder;•1
 –2 % OER increased
for mill

Summary of impact from GIZ Project on Sustainable Palm Oil Productionin Thailand

The smallholders involved were very positive about
the knowledge they gained from the project. They
reported that the most significant change was in their
management practices, where they improved on theirfarm record keeping and fertiliser management.
They adopted best management practice on soil,
water and environmental management. With soil andleaf analysis, they were able to reduce their use ofchemicals and increase fertiliser use to gain higher
yields.
The pilot mills benefited from the project, with better
quality FFB resulting in a high oil extraction rate. The
relationship between the mills and the smallholders
also improved. The mills have gained experiencein sustainable oil palm, and palm oil production
corresponding to their needs.

64

The project also created intangible impacts on the pilot
farmer groups and communities. The discovery of local
oil palm experts in various fields brought opportunities
to share best management practices. Smallholders
expanded their oil palm network and learned informal
business bargaining and negotiation skills.

RSPO IMPACT REPORT

Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ) is a provider of international
cooperation services for sustainable development.

Photo credit: New Britain Palm Oil Ltd

PROFIT

Connecting smallholders to the value chain

RSPO smallholder mechanisms

Wild Asia Group Scheme (WAGS)RSPO Smallholder Support Fund (RSSF)
Because the cost of RSPO certification is often
beyond the means of independent smallholders,
RSPO allocates a percentage of income generated
from the trading of CSPO to the RSPO Smallholder
Support Fund. This mechanism grants up to 100%of certification costs for smallholders. The RSPO
Smallholder Support Fund was support established
to help small, independent operators securesustainable palm oil certification and play a vital rolein transforming the market. As of June 2014, three
RSSF proposals worth RM1.12 million were approved
to support smallholder certification in Ghana,Indonesia and Thailand.

The Wild Asia Group Scheme (WAGS) was formed todevelop new ways to organise, support, and market
smallholder products in the global palm oil supply
chain. WAGS has supported producers in Malaysia,
Indonesia, Thailand, Papua New Guinea, The Solomon
Islands, Cameroon and Ghana to prepare to meet therequirements of RSPO.
In 2010, Wild Asia worked with Keresa plantations andmills to demonstrate a pilot model to support their
independent small farmers. Though independent
smallholders made up less than 2% of their supply
base, Keresa felt that investing in the community was ameaningful way of contributing to the society.
Over three years:• 100 members have been certified•	Yield per hectare had increased between 37%
and 39%•	Improved best management practice and fertiliser
application•	Reduction in chemical use as part of integrated
pest management

The Wild Asia Group Scheme was established in 2011
with the aim of providing a platform of support for small
independent oil palm producers.

Supporting independent growers’ accessto markets

65

Photo credit: New Britain Palm Oil Ltd

RSPO IMPACT REPORTRSPO members are often instrumental in helping support
and facilitate independent smallholders to sell their CSPO
on the market. By working directly with these companies,
independent smallholders can access a guaranteed market
to supply CSPO. In 2012, independent smallholders’ palm oil
certificates began trading on the GreenPalm platform (seepage 22). As of June 2014. a total 13,693 ha of independent
smallholder land in Indonesia, Malaysia and Thailand havebeen certified under RSPO scheme, generating sales of
44,100 tonnes of CSPO and 11,670 tonnes of CSPK.

PROFIT

Keresa and Wild Asia in Sarawak, Malaysia
140
smallholders trained
54
RSPO certified
348
workers trained at RSPO certified mill
358
hectares smallholdings
4,388
tonnes FFB certified

66

Twifo Oil Palm Plantation and Benso
Oil Palm Plantation, Ghana
1,628
smallholders trained
5,400	smallholders expected to be RSPO
compliant in early 2014
Partners:	RSPO, Johnson & Johnson, CONO
Kaasmakers

RSPO IMPACT REPORTPT Inti Indosawit Subur, Riau, Indonesia
9,010
smallholders trained
21,467
smallholders RSPO certified
41,719smallholders RSPO certified
178,578 tonnes smallholder CPO RSPO certified
Partners: RSPO, Johnson & Johnson

Credit Union Keling Kumang,West-Kalimantan, Indonesia
58
financial literacy trainers trained
204
smallholders enrolled in programme822
members trained on financial literacy5	palm oil staff employed, trained andtraining materials developed
17
socio-environmental trainers trainedPartners:	RSPO, Johnson & Johnson, Good Return/
World Education Australia

Creating a Sustainable Palm Oil Supply chain with
Cargill, Peninsula Malaysia
Test project on how to certify the potential supply
base of 2,900 smallholders at one independent mill.
7,500
hectares to be RSPO certified by 2015
22,000	hectares under better management
practices.
Partners: RSPO, Wild Asia

Palm Oil Producer Support Initiative (POPSI)
Launched in 2011, the POPSI project is targeted toreach 35,000 smallholders and 100,000 plantation
workers. The goal of POPSI is to add value to the palm
oil supply chain by supporting oil palm smallholders
and plantation workers as they work towards RSPO
certification. Solidaridad is the initiator and biggest
co-funder of the initiative.
POPSI trains smallholders in Best Management
Practices (BMP) and provides assistance incompliance with environmental and social standards
towards RSPO certification. The programmealso funds projects that aim to build capacity by
improving the business and financial literacy skills ofsmallholders. POPSI projects are currently runningin Central and Latin America (Brazil, Colombia), Asia
(Indonesia, Malaysia, Papua New Guinea), and Africa(Ghana, Nigeria).

Sustainable Palm Oil Project, Honduras
5,000
smallholders trained
7,500
workers to benefit
9 mills	involved (out of 14 mills in total),encompassing 77% of total areain Honduras
Partners: RSPO, WWF Honduras, Proforest, Henkel

Nestlé, BMPs with Independent Smallholders inEast Malaysia
1,000	palm oil smallholder farmers trainedin organisational skills, better fertiliser
and chemical management, and good
agricultural practice. Achieved RSPO
certification.
Partners: RSPO, Wild Asia

Verité Labour Project, South East Asia
Developed toolkits to improve implementation of
RSPO labour requirements.
Partners: RSPO, Johnson & Johnson

67
RSPO IMPACT REPORT

Agrobiz, Towards Sustainable Palm Oil, Colombia
110	small and medium farms trained in good
agriculture practice
1,000
workers with improved income
1,500	smallholder hectares under better
management
20,000	hectares total area under better
management.
Partners: RSPO, Johnson & Johnson

Setara: Creating an Independent Palm Oil
Smallholder hub in Jambi, Indonesia
407	independent smallholders trained andimplementing good agriculture practices.
	Better access to fertiliser and seeds.
Sharing of knowledge, material andexperience.
Partner: RSPOPROFITDRIVING MARKET
TRANSFORMATIONRSPO Trademark
The RSPO trademark logo is designed to create awarenessand support ethical decision-making for consumers. The
RSPO trademark is permissible on products containing atleast 95% CSPO. Palm oil sourced under the mass balance
supply chain includes the word “mixed” under the logo.

The Equator Principles
The Equator Principles (EPs) are part of a management
framework, adopted by financial institutions, for determining,assessing and managing environmental and social riskin projects. It is primarily intended to provide a minimum
standard for due diligence to support responsible risk
decision-making. Currently 79 financial institutions in 34
countries have officially adopted the EPs, covering over 70%
of international Project Finance debt in emerging markets.

Tracking the uptake of sustainable palm oil
The WWF Palm Oil Buyer’s Scorecard ranks 78
manufacturers of products containing palm oil and 52
retailers on compliance with reporting requirements,
targets and action toward using 100% sustainable palm oil.
The scorecard also tracks policies and plans for limiting
greenhouse gas emissions from their palm oil supply chain.
The 2013 report indicates that palm oil users are startingto take climate change seriously. Asian companies are also
showing some interest in CSPO, although this remains at
a low level. However, the report raises concern that therate of progress seems to have slowed. Demand still lags
behind supply, with only 52% of CSPO being purchased.
The report also indicates that many companies will fail tomeet their own 2015 deadline at the current rate. The reportcommends companies using mass balance as a start, butargues that there is a clear need to move towards adopting
a segregated supply chain.

The Soft Commodities Compact
The Soft Commodities Compact aims to mobilise thebanking industry to contribute to transforming soft
commodity supply chains like that of palm oil. It wasdeveloped in partnership with the Banking Environmental
Initiative and the Consumer Goods Forum (CGF), which
represents over 400 members. The objective of the compact
is to help CGF achieve zero net deforestation by 2020. Banksare committed to work with consumer goods companies
and their supply chains to develop appropriate financing
solutions that support the growth of markets producing
palm oil without contributing to deforestation.

WHAT WE HAVE ACHIEVED
Transformation markets

68

Market transformation in China and India is a vital milestonethat will have a clear and significant impact on the global
CSPO supply chain. We work with multinational companies
based in these regions to transform the market by driving
commitment to RSPO principles and manifesto. In 2012
and 2013, RSPO co-organised several events in China andIndia including the International Oils and Oil Seeds Industry
Summit and the Delhi Sustainable Development Summit.

RSPO IMPACT REPORTRSPO has also been reaching out in countries where palm
oil is an emerging crop. We have organised roadshows,conferences, events and government engagements tosecure awareness of RSPO certification.
Photo credit: Felda Global Ventures Holdings BerhadPalm Oil WWF Buyer’s Scorecard 2013:highlights
Of the 130 companies scored:•	9 had policies that addressed GHG emissions ofpalm oil supplies•	49 are moving to require suppliers comply withRSPO emission disclosure requirements•	More than two thirds have committed to 100%
certified sustainable palm oil use by 2015•	45 use 100% CSPO, amounting to 2 million
tonnes annually• Combined only use 7 million tonnes annually
Leaders – Companies with policies that addressed
GHG emissions of palm oil supplies
EcoverFerrero Trading
Henkel
REWE Group
Hershey
IKEA
Reckitt Benckiser
UnileverUnited Biscuits
Leader – Companies using more than 50%
segregated certified palm oil
Heinz
United Biscuits
Iwata
Ferrero Trading
Waitrose

69
RSPO IMPACT REPORTPROFITUse of our trademark

			The RSPO trademark is now used by 181 companies in 27 countries to indicate theircommitment to the use of CSPO. The trademark is found on product packaging
ranging from margarine, chocolate and biscuits to soap and cosmetics. Consumer
goods manufacturers in Germany are the largest users of the RSPO trademark in theirpackaging. With Indonesia now the largest consumer of CSPO, our target is to have 15
consumer products printed with the RSPO trademark by end of 2014.

Trademark by sector
80

79

70

60
51
50

40

36

30

70

20

RSPO IMPACT REPORT

9

10

6

0
Consumer
Goods
Manufacturer

Processors &Traders

Supply Chain
Associate

Retailers

Growers

PROFIT
Supporting national commitments
RSPO supports national commitments establishedindependently by industry players and government agencies.
RSPO acts as a knowledge resource and facilitator by offering
guidance on membership and market performance, bymonitoring commitments through the RSPO ACOP, and byfacilitating upstream and supply chain certification processes.
Belgium, France, Germany, The Netherlands and the United
Kingdom have already established national commitments toimport only CSPO by 2015.

Demonstrating that being sustainable
can be profitable
Profitably and Sustainability in Palm Oil Production is a
study produced jointly by WWF, CDC, the UK’s development
finance institution, and FMO, the Dutch development bank.
It is the first study to comprehensively examine the financial
costs and benefits of producing sustainable palm oil under
the guidelines set out by the RSPO. Eight companies
representing a range of business practices and geographiesand more than 54% of global RSPO CSPO and palm kernel
oil production were part of this study.
The study concludes that firms switching to sustainable palm
oil production reaped significant returns on their investments.
In some cases, switching to sustainable production was
economically transformative for their business.

While many companies were initially attracted to RSPO for
the price premiums commanded by certified sustainablepalm oil, the larger financial gain often turned out to bea result of improvements in operations, documentation
systems, labour relations, and other internal factors. The
study found that each major category of benefit was, in and of
itself, capable of outweighing RSPO implementation costs.

71
RSPO IMPACT REPORTPROFITof RSPO Implementation• Benefitsof RSPO Implementation• Costs• Costs/Benefits for Smallholders

REVENUES AND MARKET ACCESS• RSPO adoption key for market
positioning and defense, particularly
for firms selling significantly into
EU and North America

OIL PALM ESTATE:PROFIT & LOSSREVENUES

COST OF SALESOPERATIONS• Enhanced documentation leading
to myriad “micro-improvements”
in operations, execution anduniformity across estates• Pesticide and herbicide annual cost
reduction, e.g., US$250,000 and$73,859/hectare• Accident rate reduction – 42% decline– Fertilisers and Compost– Pesticides and Herbicides– Fuel– Seeds– Labour Expenses– Salaries and Wages– Benefits

GROSS MARGINCOMMUNITY RELATIONS• Major reductions in social conflicts
and associated costs (shutdowns,
development delays, etc.) – e.g.,over US$10 mil–$15 mil in 10 years
for single estate• Improved relations with local stakeholders, including government,labour, civil society and buyers

STAFF AND LABOUR• Labour turnover reductions –e.g., 6% decline• Improved motivation ofadministrative staff

OPERATING EXPENSES
LAND ASSESSMENT (HCV)• HCV (primarily assessment andpreparation) typically US$0.80–$5.00/hectare• HCV set-aside costs typically
US$0-$13.41/hectare, depending onamount identified• EIA and SIA costs US$1–$11.67 andUS$0.47–$1/hectare. However, EIA
is a legal requirement, not RSPO.

SMALLHOLDER ENGAGEMENT– Bank Charges– Dues and Subscription– Insurance– Licenses and Fees
– Miscellaneous– Office Expenses– Outside Services– Admin Payroll Expenses– Salaries and Wages– Benefits– Professional Fees
– Property Taxes– Repairs and Maintenance– Shipping and Delivery– Training and Development– Travel– Utilities– Other• Training and monitoring costs
US$2.82–$11.51/hectare• Large productivity gains – e.g.,+185% tonnes FFB/hectare• Initial certification and necessary
staffing• Training of staff and smallholders
US$0.09–$23.10/hectare• Corrective Actions typically
US$3.74–$10.99• Ongoing certification and maintenance US$2.43–$13.03/hectare(typically 33%–57% lower thaninitial certification costs)

ACCESS TO CAPITALOPERATING INCOME

DEPRECIATION AND AMORTISATION72

CERTIFICATIONSEGREGATIONINTEREST EXPENSE• Segregation is an optional costdepending on market strategy – e.g.,
US$0.30/hectare including required
supply chain certification. Additional
downstream costs may be accrued

TAXES

NET INCOME• Increased private equity and
M&A attraction• Potential project financeconditionality for 70+
multinational Equator Banks,
IFC and development financeinstitutions• Mounting pressure on palm oilbuyers from responsible investors
such the UNPRI Investor Working
Group on Palm Oil

RSPO IMPACT REPORTPROFITDe facto standard for investment screening

Sustainable Shipment Letter of Credit

In a review commissioned by WWF, 35 major palm oil
investors were asked about their understanding of, andprogress in dealing with, the challenges related to palm
oil and sustainability. RSPO is seen as the most influential
initiative and the de facto standard for investment screening
in palm oil. Investors are increasingly asked by clients toinclude environment, social and governance issues as partof their screening. Investors continue to see significant
challenges to investing in palm oil due to reputational risk,
poor environmental performance and lack of environmental,social and governance disclosure by companies.

In January 2014, RSPO certification became the firstcommodity to be eligible for the Sustainable Shipment
Letter of Credit. Developed in partnership by The Business
Environment Initiative and the International FinanceCorporation, the letter of credit awards preferential treatment
for trade in agricultural goods that meet internationallyrecognised sustainability standards. Commodities guaranteed
under the Global Trade Finance Programme, and which areshipped with a Sustainable Shipment Letter of Credit andrelevant accredited stamp, enable banks financing the trade
to qualify for a preferential rate. The expectation is thatbanks will pass these incentives on to their customers.

LESSONS AND FUTURE CHALLENGES		Working with government agencies

			There are concerns that certification of smallholders does not help them. As moreevidence demonstrates that certified sustainable palm oil offers benefits throughhigher yield and income, more engagement with government agencies will be neededto drive effective collaboration.

		Growth in ethical consumption			Economic prosperity in India and China has led to a rise ethically conscious consumers.
With the broader understanding and concern about the issues surrounding the
production of palm oil, we believe that this will lead to an increase in demand for food
manufacturers and retailers to support
sustainable production.

		

Reaching out to smaller members

			RSPO has been most actively involved with large growers. We need to reachout to medium and smaller grower members to understand their challenges
in moving towards certification and playing a more active role in the RSPO.

73
RSPO IMPACT REPORTREFERENCES

Felda Global Ventures Holdings Berhad. (2014)
Sustainability Report 2013. Retrieved from http://www.feldaglobal.com/site-content/FGVSustainabilityReport.pdf
Gunarso, P., Hartoyo, M. E., Agus, F., & Killeen, T. J. (2013, November)
Oil palm and land use change in Indonesia, Malaysia and Papua New Guinea. Retrieved from RSPO: http://www.rspo.org/
file/GHGWG2/4_oil_palm_and_land_use_change_Gunarso_et_al.pdf
Kukeawkasem, Y. (2011, November)
GIZ Project on Sustainable Palm Oil Production in Thailand. RT9 Presentation.
Kulim (Malaysia) Berhad. (2013, December)
Carbon Footprint Report 2012. Retrieved from http://www.kulim.com.my/html/files/sustainability/CARBON_FOOTPRINT_REPORT.pdf
Kulim (Malaysia) Berhad. (2014)
Sustainability Report 2012/13. Retrieved from http://www.kulim.com.my/html/Sustainability.aspx?id=1.8.1.1
New Britain Palm Oil Ltd. (2012, February)
Carbon Footprint Report 2011. Retrieved from http://www.nbpol.com.pg/wp-content/uploads/downloads/2012/02/NBPOLCarbon-Footprint-Report-2011-Final.pdf
New Britain Palm Oil Ltd. (2014)
Sustainability Report 2012/13. Retrieved from http://www.nbpol.com.pg/wp-content/uploads/downloads/2014/04/NewBritain-Palm-Oil-Limited-NBPOL-Sustainability-Report-2012-13.pdf
Palm Oil Initiative. (n.d.)
Wild Asia Group Scheme for Small Producers. Retrieved from http://oilpalm.wildasia.org/small-producers/wags/
Paoli, Gary (Editor) (2014)
Best Management Practices in the Indonesian Palm Oil Industry: Case Studies, Daemeter Consulting: Bogor, Indonesia.
Retrieved from http://daemeter.org/en/publication/download/20/best-management-practices-in-the-indonesian-palm-oilindustry-case-studies
R.E.A. Holdings PLC. (2013, February)
Carbon Footprint Report 2011. Retrieved from http://www.rea.co.uk/rea/dlibrary/panda/REA%27s%20Carbon%20
Footprint%20Report%202011%2C%20Final.pdf

74

RSPO. (2014, February)
Retrieved from Hotspots: http://www.rspo.org/en/hotspots

RSPO IMPACT REPORTREFERENCES

RSPO. (n..d.)Retrieved from http://www.pinterest.com/pin/561401909770867223/
RTRS. (2014)
Retrieved from http://www.responsiblesoy.org/
Sustainable Palm Oil. (n.d.)
REA Holdings. Retrieved from Sustainable Palm Oil Platform: http://www.sustainablepalmoil.org/growers-millers/millers/case-studies/using-the-rspo-palmghg-greenhouse-gas-emissions-calculator/#sthash.zwqgKIc7.dpuf
Thongrak, S., & Kiatpathomchai, S. (2012, August)Final Report: Impact study of the project on sustainable palm oil production for bio-energy in Thailand. Retrieved fromhttp://www.greenpalm.org/upload/files/118/Thai_Smallholder_Final_Report_of_Impact_Study.pdf
United States Department of Agriculture. (2014, June)
Oilseeds: World Markets and Trade. Retrieved from http://apps.fas.usda.gov/psdonline/circulars/oilseeds.pdf
Wild Asia Group Scheme for Small Producers
Retrieved from http://oilpalm.wildasia.org/small-producers/wags
Wilmar International Limited. (2012)
Sustainability Report 2011. Retrieved from http://www.wilmar-international.com/wp-content/uploads/2012/11/Wilmar_
SR2011.pdf
World Resources Institute. (2014, June)First detailed public maps of RSPO certified palm oil concessions released. Retrieved from http://www.wri.org/
news/2014/06/release-first-detailed-public-maps-rspo-certified-palm-oil-concessions-released
WWF. (2013, November)
Palm oil buyers scorecard. Retrieved from WWF Report 2013: http://www.wwf.se/source.php/1544243/Palm%20Oil%20
Buyers%20Scorecard%202013.pdf
WWF. (2012)
Palm oil investor review: Investor guidance on palm oil. Retrieved from WWF Report 2012: http://awsassets.panda.org/
downloads/wwf_palmoil_investorreview.pdf

75
RSPO IMPACT REPORTBASE DATA AND NOTES
Indicator

Breakdown

Unit

2014

2013

2012

2011

Germany

208

United Kingdom

200

147

97

38

131

106

76

Netherlands

119

92

69

49

Malaysia

117

95

87

77

109

88

70

48

106

86

73

57

89

70

46

29

Belgium

62

44

24

21

Australia

53

–

–

–

Italy

52

29

–

–

Others

516

396

266

163

991

829

695

505

540

309

142

64

100

103

104

93

MembershipIndonesia
By country

FranceUnited States

Ordinary
By membership type

Associate
Affiliate

Number ofmembers

Number ofmembers

Certified, production and uptake
Area
Annual production
capacity
SupplySales

UptakeProduction Areaha2,539,447

1,978,110

1,526,273

1,130,969

Certified Areaha3,006,349

2,653,058

2,105,433

1,299,891

CSPO

mt

11,125,903

9,792,185

8,184,200

5,573,202

CSPK

mt

2,556,432

2,244,312

1,896,702

1,296,488

CSPO

mt

5,276,064

8,735,843

6,724,236

4,798,512

CSPK

mt

1,214,686

2,030,746

1,570,070

1,111,998

CSPO Sales
through SG,MB

mt

1,117,042

1,551,017

984,138

831,010CSPO Sales
through B&C

mt

1,361,396

2,962,256

2,495,277

1,659,516

Total CSPO Sales

mt

2,478,438

4,513,273

3,479,415

2,490,526

CSPO Sales / Supply

mt

47%

51.7%

51.7%

51.9%

Indonesia

ha828,470

Liberiaha

98,485

Cameroonha

69,975

Papua New Guinea

ha67,179Gabon

ha

51,178

Cambodiaha

10,719Nigeriaha

5,594

Costa Rica

ha

4,145

Ghana

ha

3,715

Brazilha

1,223

NPP and HCV76

NPP area (by country)

RSPO IMPACT REPORTBASE DATA AND NOTES
Indicator

Breakdown

Unit

2014

2013

2012

2011

TrademarkNumber oflicenses

Total trademark

181

Consumer Goods
Manufacturers
By stakeholder groups

Processors & Traders
Supply Chain Associate

7951

Number oflicenses

36

Retailers
Growers

6

Germany

40

Malaysia

21

France20

United States

16

United Kingdom
By country

9

The Netherlands
Belgium

17

Number oflicenses

15
11

Indonesia

5

Poland5Australia

4

Others27
Number oflicenses

29

65

49

38

Complaints resolved/
closed

%age

0%

33.3%

60%

80%

Average time to close
a complaint

Day

NA

205

245

154

Actions plans orremedial works
undertaken

NA

12

6

1

Members suspended
or voluntarily
withdrew after
complaint verified

NA

1

2

0

By yearComplaints

Complaints
success criteria

77
RSPO IMPACT REPORTBASE DATA AND NOTES
Indicator

Total
Total
Certified Production
Area
Area

Total
CSPO

Total
CSPK

Total
FFB

CSPO
Supply(monthly)

CSPK
Supply(monthly)Countries with P&C certification
Grand total

2,992,656

2,525,754

50,928,203

11,081,803

2,544,758

923,484

212,063

Group
Certification
for
Smallholders(SHG)

13,693

13,69344,09911,674

193,872

3,675

973

Total
Total
Certified Production
Area
Area

Total
CSPO

Total
CSPK

Total
FFB

CSPO
Supply(monthly)

CSPK
Supply(monthly)

By Country

Countries with P&C certification
Brazil

107,560

33,060710,650

146,780

26,89912,232

2,242

Cambodia

7,064

7,064

105,069

20,489

3,995

1,707

333

Colombia

18,00915,82068,205

15,412

7,812

2,359

651

Ecuador

2,758

2,408

30,000

6,800

3,200

567

267

Guatemala

10,143

7,989

246,969

52,870

4,100

4,406

342

Indonesia

1,469,839

1,242,375

24,416,700

5,538,192

1,219,166

461,516

101,597

Côte d’Ivoire

20,234

18,43353,034

6,500

1,200

542

100

Malaysia

1,181,589

1,051,481

21,761,060

4,538,052

1,110,663

378,171

92,555

Papua New
Guinea149,706

125,394

2,876,851

622,354

140,341

51,863

11,695SHG Certification Unit

SHG Validity of Certificate Starts SHG Areas (Certified)Independent smallholders
FELDA Segamat Scheme Smallholder

13/6/2012

10,384

Withdrawn (Chonburi)

9/7/2012

455

UPOIC Nuakhlong-Khaopanom

10/10/2012

1,478

The Sustainable Oil Palm
Smallholders Production(Univanich-Plaipraya) Community

10/10/2012

645

Community Enterprise Group– Suratthani

10/10/2012

187

78

Wild Asia Group Scheme(WAGS – MPOB SPOC Beluran)

6/9/2013

253

RSPO IMPACT REPORT

Asosiasi Petani Sawit
Swadaya Amanah

29/7/2013

746

GLOSSARY
Associated smallholders:
Smallholders who share some of the characteristics of
independent smallholders, notably in terms of land use
and management decisions, and yet are closely linked toparticular mills for marketing and extension.
Best Management Practice (BMP):
Practical guidelines to enhance oil palm management
Certified Sustainable Palm Oil (CSPO):
Palm oil that has been grown on a plantation that has been
managed and certified in accordance with the RSPO P&C
Crude Palm Oil (CPO):
A type of unrefined comestible vegetable oil obtained fromthe fruit of the oil palm tree
Fresh Fruit Bunch (FFB):
Bunch harvested from the oil palm tree. Each bunch canweigh from 5 to 50 kilogrammes and can contain up to 1,500
or more individual fruits
Free, prior and informed consent (FPIC):
A principle that a community has the right to give or
withhold its consent to proposed projects that may affectthe lands they customarily own, occupy or otherwise use
Hectares:
A unit of measurement equivalent to 10,000 square metres,or 100m x 100m
High Conservation Values (HCV):The concept of High Conservation Values Forest (HCVF)
was first developed by the Forest Stewardship (FSC) in1999 as their 9th principle. The FSC defined HCVF asforests of outstanding and critical importance due to theirenvironmental, socio-economic, cultural, biodiversity andlandscape value.

Metric Tonne (MT):A unit of mass equivalent to 1,000 kilogrammes
New Planting Procedures (NPP):
Provides guidance on how and under what conditions news
plantings should be carried out
Oil palm:
Termed scientifically as ‘Elaeis guineensis’, it is one of the
few vegetable oils known to be high in saturated fats
Paraquat:
Paraquat is one of the most widely used herbicide, used todestroy green plant tissue on contact and by translocation
within the plant
PalmGHG Calculator:
Developed by the Greenhouse Gas Working Group 2 of RSPO
to estimate and monitor net greenhouse gas emissions
Palm Kernel Oil (PKO):
Oil extracted from the kernel or core of the palm fruit
Peat:
Peat is an accumulation of partially decayed vegetation
matter, forming in wetlands or peatlands
RSPO Principles & Criteria (P&C):
Guidelines on how palm oil companies and growers should
produce palm oil sustainably. It forms the basis of company
assessment for certification and is reviewed every five years
Smallholders:
Farmers growing oil palm on a plantation of less than 50
hectares

ISEAL Alliance:
Global membership association for sustainability standards
Land bank:
A significant amount of land kept as reserves for future
release for development and use

79
RSPO IMPACT REPORT

Mesocarp:
The reddish fleshy pulp of the fruit of the oil palmNOTES

80

RSPO IMPACT REPORTImpacts UnitRSPO Secretariat
Unit A-37-1, Menara UOA Bangsar
No.5 Jalan Bangsar Utama 1
59000 Kuala Lumpur
Malaysia
T: +603 2302 1500
E: rspo@rspo.org
www.rspo.org